| Number |
CREPEDP-55 |
| Publication Date |
May 2019 |
| Title |
Blockchain Disables Real-World Governance
|
| Author(s) |
Hitoshi Matsushima
|
| Abstract |
This study indicates that the improper uses of a public blockchain disable real-world governance in organizations and marketplaces. By using any basic application of smart contracts, such as escrow transactions, along with a revelation mechanism outside the blockchain, individuals can execute illegal cartel acts in a self-enforcing and non-judicial manner. Cartel members can then implement collective deviations without help from trusted intermediaries or any requirements on reputation or word-of-honor. We show that a first price auction is vulnerable to cartel threats even if the seller can hide bidders’ prices because bidders take a countermeasure to hidden prices by using blockchain.
|
| Keywords |
Blockchain, Smart Contract, Cartelization, Economic Governance, Non-Judicial Mechanism, Implementation |
| Other information |
Paper in English (21 pages) |