Consider an entrepreneur (E) who is negotiating with a labourl union {U}. There are two stages. In stage 1, the entrepreneur has to make an investment which is specific to the skills of the labour in the union. The cost of investment is 50. Once the investment is made, if the labour union decides to supply labour and manufacture a particular product, then the cost to the labour union is 60. The product can be sold in the market by the entrepreneur at a price of 150.