Tax reform and collective family decision-making

Traditional analysis of tax reform treats market behaviour as arising out o f individual utility maximisation. In this paper, behaviour is modelled as the Pareto-efficient outcome of a family decision process. Conditions for t he existence of a feasible, Pareto-improving tax change are presented and c ontrasted with those that obtain in the individualistic case. The consequen ces of treating households as a single individual are also discussed. (C) 1 998 Elsevier Science S.A. All rights reserved.