A model based on sinusoidal steady-state analysis is developed for the position-sensitive detector (PSD), which is approximated as a distributed RC transmission line. This model is used to study the output response of the lateral effect PSD, in two cases: i) when only one pulse-modulated light beam is incident and ii) when two light beams of different wavelengths, with one beam modulated at a frequency f and the other beam modulated at a frequency 2f, are incident at the same time. Our simulation shows, and experiments confirm, that the transient response of the PSD consists of a position-dependent dead time (time for the output current to sense the change in the induced photocurrent) and a position-independent exponential rise/decay time. For the application of resolving the positions of two or more pulse-modulated light spots, it is shown that there is a position-dependent upper limit on the usable modulation frequency. With the per-unit-length values chosen for the sheet resistance as R = 315 OMEGA/mm, and the junction capacitance as C = 330 pF/mm, the modulation frequency limit is determined to be 20 kHz.