In the smart grid electricity market, changes in consumer behaviors and price fluctuations can affect the benefits of Load Serving Entities. So, in this paper, the economic model of the incentive-based demand response program (IBDRP) is proposed based on the price elasticity of demand and consumer utility function. In peak hours and market price spikes, IBDRPs encourage active participation in managing consumption by paying incentives to customers to influence their consumption behaviors. This program benefits consumers and LSEs like retailers and aggregators by reducing consumer demands and increasing system reliability during peak hours and price spikes. Under the proposed model, the demand reduction is calculated. Then the value of optimal incentive price is obtained according to LSE\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\'s profit maximization problem. The implementation of this work is based on the smart grid, and we can implement it by using smart meters. So The proposed model is implemented in GAMS software and tested on data derived from a real-world power system.

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