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The objective of electricity restructuring is to produce reliable electricity efficiently. Even though a perfectly competitive market is the objective of restructuring, there is no such perfect market in practice. Many issues can contribute to market inefficiency, such as market design flaws, market power, and inherent engineering features of power system operations. This paper focuses on the effects of engineering features on market efficiency. Models are developed to estimate the competitive benchmark with transmission constraints and how transmission and operational constraints affect market prices based on the submitted bids of market participants. The models are applied to the Electric Reliability Council of Texas (ERCOT) market, which is now undertaking a market redesign rulemaking process. Evaluation of the performance of its current market is helpful for this policy process.