Electoral Institutions and Common Pool Problem in Iran's Development Budgeting

When over-extraction of budget resources for executing special interests policies becomes a behavioural pattern, it results in creating a phenomenon which is known as “common pool problem”. This paper analyses the common pool problem in development projects budgeting in Iran from the view point of the role of electoral institutions which is a determinant of the behaviour of members of parliament who as a matter of fact are one of the most influential groups in allocating the country’s budget. One main question of this study is to examine the impact of amalgamation of constituencies of each province - i.e. provincialising the constituencies – on MPs’ motivational behaviour in pursuing the national development plans against local ones. Consequently, the common pool problem in development budgeting is being addressed.In order to analyse the above-mentioned problem, a mathematical optimising model has been used to measure the degree of resource allocation deviation from a social optimal level before and after the amalgamation of constituencies. The study reveals that by applying this institutional change (1) the common pool problem will be alleviated (2) the MPs will be more motivated to prepare national development projects, and (3) the accountability to local constituencies will be decreased.