With the introduction of restructuring in the electric power industry, the price of electricity has become the focus of power market activities. Phase shifters in a power system can mitigate or reduce transmission congestion by redirecting line flows, reduce the cost of power dispatch by adjusting locational marginal prices (LMPs), and enhance market competition by reducing the chance of market power occurrences due to limited transmission flows. This paper analyzes the role of phase shifters in restructured power systems by simulating electricity market prices. The paper further provides a comparison among various alternatives such as transmission expansion for mitigating congestion. The simulation results are analyzed for a three-bus and presented for the Institute of Electrical and Electronics Engineers (IEEE) 118-bus power system.