During induction with high inspired concentrations of nitrous oxide, net uptake of gas produces a contraction in volume and a concentrating effect. In turn, this results in concentration and second gas effects. Most explanations of these effects are based on the common ''rectangle'' diagram devised by Stoelting and Eger and contain several inconsistencies which are explored here in order to produce a more accurate description. It is shown that in the standard diagram gas uptake is incomplete, there is ambiguity over functional residual capacity (FRC), equilibration with blood is inadequately represented and there is no representation of recirculation of anaesthetic. Compensation for loss of volume may be by means of an increased inspired ventilation, decreased expired ventilation or reduction in lung volume. Numerous accounts in the literature (including those based on the standard diagram) focus on the former mechanism at constant FRC. This has produced an unbalanced picture in which it is often implied that extra gas is routinely drawn into the lu ngs to replace that taken up. Significant compensation by this means cannot occur, for example when a constant volume ventilator is used. In discussing concentration and second gas effects, it is necessary to give a balanced view of the alternative mechanisms of compensation or to revert, as above, to a simple statement of the principle of conservation of volume.