Abstract
This paper studies coordination under incomplete information and payoff complementarities. Specifically, potential entrants can decide on their time of entry. Each entrant has private information about market profitability. The main finding is that an uninformed social planner can always increase welfare by subsidizing early entrants. However, the scope for intervention decreases with payoff complementarities. Further, we show that lump sum subsidies can impede learning and that welfare is a non-monotonic function of subsidies. We also show that it can be justifiable to bail out early entrants that have been left stranded.