We compute the partition function for the exotic instanton system corresponding to D-instantons on D7 branes in Type I theory. We exploit the BRST structure of the moduli action and its deformation by RR background to fully localize the integration. The resulting prepotential describes non-perturbative corrections to the quartic couplings of the gauge field F living on the D7s. The results match perfectly those obtained in the dual heterotic theory from a protected 1-loop computation, thus providing a non-trivial test of the duality itself.
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