Designing an Efficient and Incentive-Compatible Mechanism of Self-Adjusting in the Provincial ‎Income-Expenditure System

Mechanism design theory is the art of designing and guaranteeing a set of political and ‎motivational rules in the interaction environment which, by creating the necessary and sufficient ‎internal motivation in the agents, coordinates their behaviors in such a way that simultaneously realizes the ‎individual goals and interests of the agents, and also the collective results desired by the policymakers and ‎planners. This research aims to design efficient and incentive-compatible mechanisms of self-regulation in the ‎income-expenditure system of the provinces, to concurrently maximize the incentive to ‎collect provincial public revenues and reduce provincial imbalances. The library method, in the form of ‎studying the existing laws and regulations, and documents, was used to collect data and information for ‎‎2022, and were analyzed in accordance with the approach of mechanism design theory. The findings of the ‎present study show that by creating a complete and guaranteed dependence between the expression ‎and collection of provincial public revenues with the amount of allocation of credits for the ‎acquisition of provincial capital assets, and also the restoration of other provincial spending credits ‎and the acquisition of capital assets, sufficient internal motivation in the provinces can be created. Such informed motivation maximizes the province's income and credit and realizes the provincial ‎balances so that in the first year of implementation, at least 100 Hemats (thousand billion Rials) will ‎be added to the country's general income in addition to the usual process.