The two basic mechanisms of electricity market are the traditional system marginal price bidding mechanism and pay-as-bid auction mechanism. This paper discussed the incentive compatibility of SMP and PAB auction mechanism from the auction point of view, and then make an in-depth analysis of the reason why power generators abuse market power under the two basic mechanisms. Through the analysis we can get the conclusion that both the SMP and PAB auction mechanism are lack of the incentive compatibility which make power generators bid according to the true cost information, so it affects the stability of the electrical power system and the economic power dispatch.Thus,a new bidding mechanism with the incentive compatibility is needed.