We present an improved prescription for matter power spectrum in redshift
space taking a proper account of both the non-linear gravitational clustering
and redshift distortion, which are of particular importance for accurately
modeling baryon acoustic oscillations (BAOs). Contrary to the models of
redshift distortion phenomenologically introduced but frequently used in the
literature, the new model includes the corrections arising from the non-linear
coupling between the density and velocity fields associated with two
competitive effects of redshift distortion, i.e., Kaiser and Finger-of-God
effects. Based on the improved treatment of perturbation theory for
gravitational clustering, we compare our model predictions with monopole and
quadrupole power spectra of N-body simulations, and an excellent agreement is
achieved over the scales of BAOs. Potential impacts on constraining dark energy
and modified gravity from the redshift-space power spectrum are also
investigated based on the Fisher-matrix formalism. We find that the existing
phenomenological models of redshift distortion produce a systematic error on
measurements of the angular diameter distance and Hubble parameter by 1~2%, and
the growth rate parameter by ~5%, which would become non-negligible for future
galaxy surveys. Correctly modeling redshift distortion is thus essential, and
the new prescription of redshift-space power spectrum including the non-linear
corrections can be used as an accurate theoretical template for anisotropic
BAOs.Comment: 18 pages, 10 figure