Nash bargaining within a low-carbon supply chain under yield uncertainty

Under the Nash bargaining framework, this article examines participants’ bilateral contract negotiations and the effects of bargaining power in a low-carbon supply chain under yield uncertainty. Our study shows that Nash bargaining equilibrium on the wholesale price exists across all bargaining power structures. We find that the effects of bargaining power on the optimal equilibrium decisions are determined by the low-carbon cost. When the low-carbon cost is relatively high, an increase in the retailer’s bargaining power leads to decreases in the wholesale price, emission reduction level, and retail price, specially, the supplier will not engage in any carbon reduction efforts if the retailer possesses all the bargaining power. Conversely, when the low-carbon cost is relatively low, the opposite trends hold true. Moreover, we find that both firms benefit from their respective bargaining power. For the whole supply chain, the best performance is not achieved when either the supplier or the retailer holds all the bargaining power, but rather when under the optimal bargaining power structure. Finally, our study demonstrates that the effects of yield uncertainty, consumer price sensitivity, and low-carbon sensitivity on the supply chain are closely tied to both the low-carbon cost and the firms’ bargaining power.