Use is made of a numerical simulation of the light-current characteristic to examine the errors which may arise in the determination of the optical mode loss (alpha(i)) from the cavity length dependence of the external differential efficiency (eta(ext)(d)). In particular, we focus on the effects of incomplete Fermi level pinning and carrier leakage, and show that cui can only be determined correctly if eta(ext)(d) is determined under conditions where it is invariant both with current level and temperature. (C) 1997 American Institute of Physics.