  We study a model of of LS I +61 303 in which its radio to TeV emission is due
to interaction of a relativistic wind from a young pulsar with the wind from
its companion Be star. We assume the fast polar wind is clumpy, which is
typical for radiatively-driven winds. The clumpiness cause the two winds to
mix. The relativistic electrons from the pulsar wind are retained in the moving
clumps by inhomogeneities of the magnetic field, which explains the X-ray
variability observed on time scales much shorter than the orbital period. We
calculate detailed inhomogeneous spectral models reproducing the average
broad-band spectrum from radio to TeVs. Given the uncertainties the form of the
distribution of relativistic electrons, the X-ray spectrum could be dominated
by either Compton or synchrotron emission. The recent Fermi observations
constrain the high-energy cut-off in the electron distribution to be at the
Lorentz factor of 2 10^4 or 10^8 in the former and latter model, respectively.
We provide formulae comparing the losses of the relativistic electrons due to
Compton, synchrotron and Coulomb processes vs. the distance from the Be star.
We calculate the optical depth of the wind to free-free absorption, showing
that it will suppress most of the radio emission within the orbit. We point out
the importance of Compton and Coulomb heating of the stellar wind within and
around the gamma-ray emitting region. Then, we find the most likely mechanism
explaining the orbital modulation at TeV energies is anisotropy of emission.
