The increasing use of demand‐side management, as a tool to reliably meet electricity demands at peak time, has stimulated interest among researchers, consumers and producer organiza‐tions, managers, regulators and policymakers. This research reviews the growing literature on models which are used to study demand, customer base‐line (CBL) and demand response in the electricity market. After characterizing the general demand models, the CBL, based on which the demand response models are studied, is reviewed. Given the experience gained from the review and existing conditions, the study combines an appropriate model for each case for a possible application to the electricity market; moreover, it discusses the implications of the results. In the literature, these aspects are studied independently. The main contribution of this survey is attributed to the treatment of the three issues as sequentially interdependent. The review is expected to enhance the understanding of the demand, CBL and demand response in the electricity market and their relationships. The objective is conducted through a combination of demand and supply side managements in order to reduce demand through different demand response programs during peak times. This enables electricity suppliers to save costly electricity generation and at the same time reduce energy vulnerability.