Blockchain-enabled horizontal capacity sharing under demand uncertainty

Supply chain flexibility, particularly volume flexibility, is crucial for mitigating demand uncertainty. This study explores how two rival manufacturers with symmetrical capacity constraints can enhance supply chain flexibility through cooperation in capacity and information sharing. Utilising blockchain technology, manufacturers ensure information symmetry and prevent breaking contracts. By comparing equilibrium solutions of strategies in which manufacturers do not adopt blockchain and the two cooperation strategies, this study examines conditions under which manufacturers adopt blockchain for cooperation, the impact of capacity level on their decisions and profits, and the impact of blockchain adoption on consumer surplus and social welfare. The findings indicate that manufacturers adopt blockchain-enabled information sharing with a high capacity level, whereas blockchain-enabled capacity sharing is preferred with a moderate capacity level and non-extremely low demand uncertainty. Moreover, capacity sharing can occur at low and capacity-independent transfer prices in a moderate-to-high capacity scenario, and even at zero when demand uncertainty is sufficiently high. Additionally, a low-to-moderate capacity level leads to a higher transfer price and lower transfer quantity. This results in the largest expected profit and significant capacity-sharing advantage. Overall, in most cases, consumer surplus and social welfare benefit from capacity sharing.