Optical polarization bistability induced by transverse‐magnetic‐ (TM) wave injection is thought from experimental results to originate from simultaneous generation of the oscillation of the transverse‐electric wave (TE oscillation) and the amplification of the transverse‐magnetic wave (TM amplification). In order to prove authenticity of this assertion, we use rate equations that include a term of the TM mode and an equation of the transmittance of the laser cavity. The calculations show that the carrier density is kept constant in the low‐TM‐photon‐density region while it varies in the high‐TM‐photon‐density region. It is also shown that the constant gain is divided into both TM amplification and TE oscillation in the former region. The transmittance changes only in the latter region since the refractive index varies with the carrier density. The bistability appears between these two regions. Calculated light output versus light input characteristics show good agreement with the experimental results.