Transactions in the electricity market have to comply not only with the physical laws in the power system

but also with the economic laws. At the same time

they are affected by a series of potential and non-physical factors

such as market participants' subjective intentions. Therefore

it is imperative to find a scientific mathematical modeling method to effectively explore and describe the impact of those potential variables as well as their interrelation. However

the relationship between these factors is complicated and difficult to measure quantitatively. An analysis of latent variables in structural equation modeling will be well suited for the electricity market by combining the methods of factor analysis and path analysis. And it can effectively quantify the factors that affect the efficiency

establish a quantitative relationship model in the process of electricity market practice between the “output” and “input”

realize further “feedback control” and provide a reference for electricity market design and development. Efficiency modeling based on structural equation modeling is proposed to provide an effective mathematical tool for the quantitative analysis in electricity market. Finally

the validity of this model is verified by the empirical analysis of a pilot electricity market in the northeast of China from 2004 to 2005. This work is supported by National Natural Science Foundation of China (No. 71401055).