Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105059
Authors: 
Helm, Carsten
Schmidt, Robert C.
Year of Publication: 
2014
Series/Report no.: 
Oldenburg Discussion Papers in Economics V-371-14
Abstract: 
A central question in climate policy is whether early investments in low-carbon technologies are a useful first step towards a more effective climate agreement in the future. We introduce a climate cooperation model with endogenous R&D investments where countries protect their international competitiveness via border carbon adjustments (BCA). BCA raises the scope for cooperation and leads to a non-trivial relation between countries' prior R&D investments and participation in the coalition. We find that early investments in R&D render free-riding more attractive. Therefore, with delayed cooperation on emission abatement and ex-ante R&D investments, the outcome is often characterized by high participation but inefficiently low technology investments and abatement.
Subjects: 
climate treaty
border carbon adjustment
border tax adjustment
coalitions
R&D
JEL: 
D62
F53
H23
Q55
Document Type: 
Working Paper

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