Actual performance measurement systems do not only consider financial measures like costs and profits but also non-financial indicators with respect customer service, quality and flexibility. Using the newsvendor model we explore the influence of possibly conflicting performance measures on...

In this paper we consider a regulated monopoly that can pad its costs to increaseits cost reimbursement. Even while padding is ineácient the optimal incentivescheme tolerates some padding of costs to reduce the information rents paid tolow cost types. It is shown that high cost ßrms pad costs...