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Mathematical model has been developed for erbium luminescence in silicon nanocrystals. Parameters involving the erbium excitation and de-excitation processes have been analyzed. It has been shown that, carrier injections of the order of 1019/cm3 in a nanocrystal system can produce sustained lasing action. Laser outputs of the order of milliwatts have been estimated for realistic values of erbium incorporation and excitation conditions.