Auctions: Theory and Practice

Course content

Auctions are used for a wide variety of economic transactions. They are used to allocate pollution permits, to sell concert tickets, and to put a price tag on consumer goods such as electricity and pharmaceuticals. Auctions represent a pure form of market interaction, which means that the insights drawn from this field are readily applicable to more general economic concepts. In this course, we will take a closer look at auction theory and its practical applications.


We will first cover standard auction theory related to single-unit auctions, such as various simple auction formats, concepts such as the winner’s curse, the revenue equivalence theorem, etc.


We will then move on to more complex topics, such as multi-unit and multi-object auction formats and the specific complications associated with allocating multiple goods (e.g. substitutability/complementarity, exposure risk, switching rules) as well as specific issues related to repeated auctions.


In the final part of the course, we will investigate how to design auctions subject to certain policy objectives. In particular, we will focus on auctions and tenders with objectives related to competition economics, such as the support of market entry, the avoidance of foreclosure or collusion, the facilitation of “fair” outcomes, etc. Specific auction design features covered during the course will include concepts such as activity rules, information rules, bid signalling, caps and floors.


Throughout the course, we will place considerable emphasis on incorporating specific cases, i.e. applications of auction theory in practice, in order to demonstrate theoretical concepts. These cases will cover auctions and tenders from a variety of fields and industries, including telecommunications, pharmaceuticals, electricity, IP addresses, agriculture, etc.”


MSc programme in Economics – elective course


(Course code AØKA08229U replaces AØKA08053U)


Learning outcome

After completing the course, the student must have achieved:


  • of basic auction formats and the ability to characterise auctions in terms of theoretically relevant properties
  • of optimal bid strategies for buyers in simple auction types, as well as knowledge of and the ability to exploit the fundamental result regarding revenue equivalence in simple standard auctions
  • of fundamental concepts and complications associated with multi-object and multi-unit auctions as well as the extension of concepts from simple auctions to these contexts



  • to understand the problems associated with designing auctions subject to certain policy objectives, in particular in relation to competition economics, and the ability to identify potential auction regulations that might address specific issues
  • to understand the application of auction theory to real-life auctions, in particular in relation to the specific cases covered in the course



  • to understand and deal with the main issues related to the design and implementation of auctions in practice.
  • to, analytically and practicaly, understand the behaviour of various parties (both bidders and sellers) in an auction.


Active participation from students is expected, in particular in conjunction with cases and practical applications.

Main textbooks:

  • Krishna, V. (2010). Auction theory. Amsterdam: Academic.
  • Klemperer, P. (2010). Auctions: Theory and practice. New Delhi: New Age International. (available for free online on the website of the author’s university)
  • A number of shorter texts and case documents will also be integrated into the curriculum.

It is recommended that students have followed Microeconomics III prior to taking the course, or are at least following Microeconomics III in parallel with the course.

BSc in Economics or similar

3 hours lectures a week from week 36 to 50 (except week 42).

The overall schema for the Master can be seen at https:/​/​​polit_ba/​undervisning/​Lektionsplan-E18/​skemaer/​Sider/​default.aspx

Timetable and venue:
To see the time and location of lectures please press the link under "Se skema" (See schedule) at the right side of this page. E means Autumn.

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E18; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”

7,5 ECTS
Type of assessment
Written assignment, 12 hours
individual take-home exam.
The exam assignment is given in English and must be answered in English.
The students are allowed to talk together about the given problem-set but must work on, write and upload the assignment answer individually. The plagiarism rules must be complied.
All aids allowed
Marking scale
7-point grading scale
Censorship form
No external censorship
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 152
  • Exam
  • 12
  • English
  • 206