Power system is often operated upon its rated capacity that sometimes it results in loading of the transmission lines exceeding its thermal limits. This results in congestion of transmission lines. Congestion of transmission lines not only threatens the security of power system but it also affects its economic operation. Therefore, congestion management remains the central issue to the management of powertransaction in competitive environment of electricity market. Market participants do not bother about the reliability and security of the system. They participate with the only aim of maximizing their profit. Without robust congestion management strategy, their actions can put the transmission system operation in stake. Therefore, interaction of congestion management with energy market economics should be carefully accomplished such that market inefficiency cannot take away the benefits promised by deregulation to the society. The management of congestion in transmission lines is somewhat complex in restructured power system as compared to that in VerticallyIntegrated Utility. The proposed work is focused on the different techniques adopted to manage congestion efficiently in competitive electricity market such that power system economics remain intact. Three different means of managing congestion have been proposed which are by using, i) generation rescheduling ii) distributed generation and iii) FACTS devices. Also, an efficient optimization technique based on Particle Swarm Optimization technique has been proposed to solve the non-linear congestion management problem. This thesis is also aimed to shed some light on various developments in electricity market structure.