Abstract: We consider a two-tier agricultural supply chain where a farm and a retailer propose to adopt Internet of Things and blockchain technology (IoT+BCT) to deal with yield uncertainty and consumers’ safety concern about the agri-product. By constructing a Stackelberg model, the equilibrium of the pricing and production decisions between the retailer and the farm is analyzed, along with the impact of IoT+ BCT and the adoption willingness of supply chain members. The study finds that the increase in the retailer’s price after adopting IoT+BCT equals the average of the benefit of IoT+BCT in alleviating consumers’ concern and the unit variable cost. However, demand (or planned production amount) will only increase when the “net” benefit of IoT+BCT (defined as the difference between the concern alleviation benefit and the variable cost of IoT+BCT) is sufficiently high. Generally, the farm is more willing to adopt IoT+BCT than the retailer. The retailer is more likely to adopt the IoT+BCT when the quality of the agricultural product is higher. Through Nash bargaining based on revenue sharing, the likelihood of both agents concurrently adopting IoT+BCT is enhanced, leading to potential Pareto improvement. Numerical experiments are conducted in order to validate the theoretical results and to derive additional managerial insights.

Key words: agricultural supply chain, internet of things, blockchain, yield uncertainty, Nash bargaining