Abstract: To study the problem ofmonopoly in the electricity industry in China, a game theorymodel was designed according to the demand characteristics in the electricity market and by applying the theory ofmonopoly and regulation. The result indicates that the electricity producing companies have strong collusionmotivation; and thatnaturalmonopoly exists in the electricity transmissionmarke,t and new monopoly is easy to form due to the special position of electricity transmission companies. Administrativemonopoly is a significant obstacle for formation of effective competition in both the electricity producing and transportation markets. At las,t the measures of solving monopoly problem were suggested.