With the liberalization of the electricity market, the number of electricity companies and the types of transactions are increasing. There are more and more uncertainties in the market, and the operating conditions and disturbance scenarios are more complex and unpredictable. Traditional electricity market model has been difficult to cope with the complex and changeable market environment and new subjects. Therefore, it is urgent to study the operation mode and trading mechanism of competitive retail market. The operation mode of competitive retail market is studied, a competitive retail market model is constructed based on the relationship among the main players in the market, and the trading mechanism of competitive retail market are put forward from the aspects of electricity tariff composition and settlement.