Consider a market for vaccines. Firm 1 will definitely produce in this market. Firm 2 can choose between In and Out; simultaneously, firm 1 makes an investment decision: should it make a costly investment in order to modernize its plant? Firm 1 has private information about her investment cost - either low (L) or high (H). The prior belief that cost is L is = 1=2. The pay offs are shown below (left matrix is for low cost and right matrix for high cost)