Priority service offers a menu of contingent contracts for distribution of scarce supplies. Prices inducing customer's efficient self-selection are expectations of spot prices for comparable service. Customers' selections reveal the benefit of capacity expansion. Priority service can be implemented via sale of "priority points" or via provision of compensatory insurance. Several priority classes suffice to obtain most efficiency gains. Priority service Pareto dominates random rationing if excess revenue is refunded equally to customers.

Much effort has recently been devoted to the development of strategic models of bargaining with private information. At the same time, empirical analyses of data on collective bargaining in the labor market have generated an interesting list of facts to be explained. In this paper we assess the prospective interactions between these theoretical and empirical developments. The style here is expository: detailed arguments have been ruthlessly suppressed. A more complete treatment can be found in our 1989 article. The theoretical models deal with conflicts between rational bargainers in situations where at least one of the bargainers has private information, as in the case where an employer knows more about the value of labor's product than the workers do. We start by explaining why private information is important in building models of strikes. In a naive model of collective bargaining, the union starts with a tough demand, and

Priority service offers a menu of contingent contracts for distribution of scarce supplies. Prices inducing customers' efficient self-selection are expectations of spot prices for comparable service. Customers' selections reveal the benefit of capacity expansion. Priority service can be implemented via sale of "priority points" or via provision of compensatory insurance. Sever al priority classes suffice to obtain most of the efficiency gains. P riority service Pareto dominates random rationing if excess revenue i s refunded equally to customers.