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I don't know.  However, a puppy that I sold is now 7 months old.  She is allergic to all kinds of things.  Sire and Dam don't have allergies, and the litter mates don't have allergies.  The lady  had to have all kinds of testing done and I know it was not cheap.  She was not mad and did not ask for anything.  She just wanted to make me aware.  I did offer her a full refund or I offered to cover 1/2 of the vet bills.  She wants another dog in a couple of years.  So she will get one.  I believe in doing the right thing.

That depends on a lot of things.  For instance, is there any reason the breeder should have known the pup had allergies--as in, is either of the parents allergic to anything--any food, any substance, any insect, any environmental allergen--or had either parent ever produced other offspring with any kind of allergy?   

And then you have to consider the differences between the environment the pup was raised in versus where it currently lives--does anyone in the buyer's home smoke? Is there a difference in housekeeping (i.e., more or less dust/debris/cleaning products used) between the two places?   Are there different plants/trees/grasses where the pup now lives as compared to where he was born and raised?  There's many, many variables that come into play when it comes to allegies. 

Did the breeder offer a warranty when you bought the pup, and if so, what are the terms in that contract?  $2000 isn't really an outrageous price for a show/stud prospect, to be frank--well-bred pups with known faults that would relegate them to pet status run around the same figure, from what I've seen.  (BTW, while I agree that a pup with allergies shouldn't be used for breeding as an adult, there's nothing stopping you from showing him...so that end of the argument falls flat, I think.)

Hopefully you'll be able to find the right combination of things to stop the itching and keep the pup comfortable and happy, and hopefully he's a nice dog that you'll enjoy having in your life even though he isn't what you dreamed he would be.

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I am not a breeder, but if I were, and you provided me with proof that you had exhausted all avenues, I would refund your money so you could use it towards vet bills,,that's just me

Have you done the bloodwork to find out exactly what the dog is allergic to?  Most of these things are food related.  The easiest fix for these problems is to switch foods.  What is it you feed?  Have you tried raw?

 I've had such a dog & I empathize with you. I agree with the raw food trial.  Start with single source, introduce slowly & give it some time. Get advice from holistic practitioner.   Many a skin problem has been improved with biologically appropriate diet.  As a breeder I would refund or replace if all resources have failed.  Tough luck for you and more especially for your hapless young dog.  He must be miserable.

Never discount the dog until you've tried at least a few months of a good, nutritionally balance, raw diet. If one protein source doesn't work, try another. I can't say as I have ever heard of a dog on raw food with persistent allergies, but but even if you convert to raw, success won't happen over night.  
BTW- Don't forget to fast the dog for at least 24 hrs. before switching from dry/processed food to raw. Best to start with a clean slate and an empty gut.
Good luck.