A novel Nash-based low-carbon implementation in agricultural supply chain management

Abstract

The transition to low-carbon agriculture is seen as essential for accelerating the implementation of ecologically friendly and climate-smart agricultural supply chain management strategies. Success in these efforts depends on robust policy frameworks, effective stakeholder participation, and the availability of agricultural products to customers. This study introduces a conceptual and operational structure for the incorporation and management of an agricultural supply chain with a low-carbon scheme through the establishment of a collaborative market environment involving farmers, agricultural enterprises, and consumers. Within this framework, agricultural enterprises and farmers engage in a cooperative Nash game to determine the extent to which they are willing to employ low-carbon practices in response to collaborative market prices and government policies, including subsidies and carbon taxes. The Nash game yields a unique Nash equilibrium, suggesting the possibility of cooperative negotiations among the parties with the goal of improving their financial gains. The proposed model is applied in two Brazilian sugarcane supply chain case studies, integrating with traditional biorefinery mills to produce and market ethanol as a gasoline alternative. Our results suggest that (1) successfully allocating government subsidies and taxes motivates low-carbon adoption; (2) the government taxation policy stabilizes the low-carbon supply chain, improving stakeholder market pricing and consumer affordability; and (3) reduced cost gaps between low-carbon and non-low-carbon alternatives increase low-carbon adoption. As a result, this study provides fresh insights on the Nash collaboration of stakeholders in accordance with government policies to create a cleaner and more affordable agricultural supply chain market.