Allocation is how a manufacturer or distributor rations scarce stock during a shortage. Instead of filling any single order in full, the vendor splits limited supply across its customer base on set terms, so no one buyer drains the available inventory and leaves everyone else with nothing.
In an allocation market the levers are quantity and time, not just price. Lead times stretch, from a few weeks to twenty, thirty, forty weeks or more, orders ship partially, and a buyer's share is often pegged to past purchase history. This is the opposite of the spot market, where stock is bought at a moment's notice at whatever the going rate is, and where prices can move sharply, sometimes doubling within days when supply tightens.
For wholesale buyers the practical read is where your stock is coming from and on what terms. Allocation supply through an authorized channel is more predictable but capped and slower; spot supply is fast and open but exposed to volatile pricing and, in electronics, higher counterfeit and quality risk. In a genuine shortage, list prices from allocation and quoted prices on the spot market can diverge widely for the same part, so a quote only means something once you know which market it came from. Reading a shortage well means matching predictable demand to allocation and treating spot buys as the flexible, higher-risk top-up.