  We have developed a model for the variability of gamma ray emission in jets
of active galactic nuclei in which the variability arises as a result of
photon-photon pair production interactions with X-rays emitted by a hot spot in
the inner part of the accretion disk. As the hot spot orbits around the central
engine, the amount of absorption varies periodically. Our model may account for
the observed variability of TeV emission from Markarian 421 and other blazars
detected by the EGRET instrument on the Compton Gamma Ray Observatory, as well
as correlated variations of X-ray and TeV gamma flux from Markarian 421.
Quasi-periodic variations observed in Markarian 421 enable us to place an upper
limit on the black hole mass of (2-30) times 10^8 solar masses.
