In the present paper, referring to known characteristics of the outer hair cells functioning in the cochlea of the inner ear, a functional model of the outer hair cells is constructed. It consists of a linear feed-forward circuit and a non-linear positive feedback circuit. The feed-forward circuit reflects the contribution of local basilar and tectorial membrane areas and passive outer hair cells' physical parameters to the forming of low-selectivity resonance characteristics. The non-linear positive feedback circuit reflects the non-linear outer hair cell signal transduction processes and the active role of efferents from the medial superior olive in altering circuit sensitivity and selectivity. Referring to an analytical description of the circuit model and computer simulation results, an explanation is given over the biological meaning of the outer hair cells' non-linearities in signal transduction processes and the role of the non-linearities in achieving the following: signal compression, the dependency of circuit sensitivity and frequency selectivity upon the input signal amplitude, the compatibility of high-frequency selectivity and short transient response of the biological filtering circuits.