EXPRESS: Navigating Traceability: How Pricing and Responsibility Sharing Impact Quality and Welfare

As consumer demand for transparency and accountability in product sourcing grows, traceability-enabled technologies are increasingly adopted across supply chains. This paper explores the diverse impacts of traceability on product quality and supply chain welfare, particularly on pricing and responsibility sharing among stakeholders. We develop a multi-agent game-theoretic model to investigate how effective traceability systems are in enhancing product quality and supply chain members’ welfare.We find that traceability operates as a double-edged sword: it does not always improve quality or benefit all parties, and its effectiveness depends critically on how pricing power and responsibility for quality failures are allocated between the buyer and suppliers. Under buyer pricing, traceability raises quality and benefits the buyer when quality improvement is cost-efficient, whereas it benefits suppliers when quality improvement is costly. Under supplier pricing, traceability always benefits suppliers, but it improves quality only when responsibility is exogenously set or when quality improvement is cost-efficient, and it benefits the buyer only when responsibility is endogenously chosen or when quality improvement is cost-efficient. These findings provide important managerial implications for practitioners and offer guidance for policymakers and firms in designing traceability systems that enhance product quality and overall supply chain welfare.