Towards blockchain-enabled circular closed-loop supply chain and impact of consumers’ distrust in price, product greenness sensitivity and carbon tax and subsidy

With the increasing emphasis on environmental sustainability, both governments and consumers are more concerned than ever about the greenness of products. In this complex landscape, Supply Chains (SCs) face challenges in building trust and avoiding greenwashing accusations. Blockchain technology offers a promising solution by ensuring transparency and circularity within SCs, particularly in identifying customers for product recycling. This study pioneers the exploration of consumers' distrust in pricing and product greenness, alongside the impact of carbon policies (taxes and subsidies) within a closed-loop supply chain (CLSC). Using classical Stackelberg game theory, we develop two models that identify equilibrium decisions for SC members, focusing on pricing, green production investment, circularity, and blockchain adoption. Additionally, we propose an evolutionary game theory model to find the optimal government policies and identify the long-term behaviour of the CLSC and government in two heterogeneous populations. Our findings reveal that if the retailer's share of blockchain costs falls below a certain threshold, blockchain adoption becomes less profitable than exclusive investment in green production. A higher (lower) subsidy rate benefits (harms) the retailer but disadvantages (benefits) the collector. Blockchain adoption is generally more profitable for manufacturers and retailers, though less so for collectors, and it also drives greater investment in green production. While subsidies encourage blockchain adoption, they are not a sustainable long-term strategy for governments. Ultimately, the evolutionarily stable strategy for SCs involves a balanced investment in both green production and blockchain or green production alone, depending on market characteristics and cost-sharing structures.