Research on matchmaking tradeoff competition mechanism based on transmission price and environmental expenditure is the key issue of competition mechanism design in regional electricity market, because the social welfare and interest allocation of the parties are decided by competition mechanism directly. This paper presents an improvement on the PAB matchmaking tradeoff competition mechanism based on transmission price, loss and environment expenditure. With theoretical analysis, a new mathematical matchmaking tradeoff competition mechanism model is established, it reflects the transmission price and environmental expenditure in the competition results especially settlement tariff price considerably. The results of numerical example reveal the rationality of the proposed model in electricity market.