A Certain Notion of Strategy Freedom under Retail Competition in Claims Problems

TL;DR

This paper introduces a new axiom for claims problems that ensures rules prevent order inflation in retail competition, characterizing the weighted constrained equal awards rule and enhancing understanding of strategic decision-making.

Contribution

It proposes a novel axiom for claims rules that strengthens existing conditions and characterizes a key rule in the context of retail competition and capacity allocation.

Findings

The new axiom disincentivizes order inflation in claims problems.

It characterizes the weighted constrained equal awards rule.

The axiom enhances the theoretical framework for claims rules in retail settings.

Abstract

A new axiom for rules for claims problems is introduced. It strengthens a condition studied in supply chain literature, which forces rules to disincentivize order inflation under capacity allocation and retail competition. The relevance of the axiom is further demonstrated by one of the main results of the present article: it characterizes the weighted constrained equal awards rule together with known natural axioms.