Zwicker has demonstrated that the threshold for a high‐frequency test‐tone burst in the presence of a continuous low‐frequency masking tone is a complicated function of the frequency and intensity of the masker and the phase of the masker at which the test tone is presented. ’’Masking period patterns’’ measured for these stimuli show nonlinear effects in that at high masker levels the threshold of test‐tone bursts reaches local maxima at two different phases of the masker. We have investigated the implications of these psychophysical data on a computational model for motion of the basilar membrane. The model consists of a nonlinear mechanical system followed by an additional stage of frequency selectivity (’’second filter’’). The output of the model is applied as input to a threshold‐level detector. With this model it is possible to reproduce the effects Zwicker observed. Masking period patterns are interpreted as a mnifestation of two‐tone suppression. On the basis of our computer simulation of Zwicker’s psychophysical data, we make the following specific predictions concerning the nature of mechanical to neural transduction at the auditory periphery: (1) Membrane motion in one direction produces a nonlinear increase in the loss term, while membrane motion in the other direction does not. (2) The direction of membrane motion that produces increased loss is also the direction of motion that produces neural excitation. (3) There is a stage of sharpening, a ’’second filter,’’ between membrane motion and the neural excitatory signal.