Abstract
We study gaugino condensation in the presence of an intermediate mass scale in the hidden sector. S-duality is imposed as an approximate symmetry of the effective supergravity theory. Furthermore, we include in the Kähler potential the renormalization of the gauge coupling and the one-loop threshold corrections at the intermediate scale. It is shown that confinement is indeed achieved. Furthermore, a new running behaviour of the dilaton arises which we attribute to S-duality. We also discuss the effects of the intermediate scale, and possible phenomenological implications of this model.
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