Summary
This note extends Gorman's [1959] classic result on two-stage budgeting to encompass the two-group cases that he assumed away. The proof, which exploits unpublished and recently published results not available to Gorman in 1959, makes it apparent that the entire structure needed for two-stage budgeting is, in fact, imbedded in the two-group case.
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We thank two referees for comments that improved the exposition.
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Blackorby, C., Russell, R.R. Two-stage budgeting: An extension of Gorman's theorem. Econ Theory 9, 185–193 (1997). https://doi.org/10.1007/BF01213453
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DOI: https://doi.org/10.1007/BF01213453