An N=2 Dual Pair and a Phase Transition

We carefully analyze the N=2 dual pair of string theories in four dimensions introduced by Ferrara, Harvey, Strominger and Vafa. The analysis shows that a second discrete degree of freedom must be switched on in addition to the known `Wilson line' to achieve a non-perturbatively consistent theory. We also identify the phase transition this model undergoes into another dual pair via a process analogous to a conifold transition. This provides the first known example of a phase transition which is understood from both the type II and the heterotic string picture.