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Climate cooperation with technology investments and border carbon adjustment / Carsten Heim and Robert C. Schmidt.  Harvard Project on Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School, April 2014, 35 p. (Discussion Paper 2014-65)http://belfercenter.ksg.harvard.edu/files/dp65_helm-schmidt.pdfAuthors's 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&#38;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&#38;D investments and participation in the coalition. We find that early investments in R&#38;D render free-riding more attractive. Therefore, with delayed cooperation on emission abatement and ex-ante R&#38;D investments, the outcome is often characterized by high participation but inefficiently low technology investments and abatement.