I turn now to discussion of the theory of the GRB and the prompt emission. It is generally accepted that both the GRB and the afterglow arise due to dissipation of the kinetic energy of the relativistic flow. The relativistic motion can be dissipated by either external [184, 234, 333] or internal shocks [276, 289, 334]. The first involve slowing down by the external medium surrounding the burst. This would be the analogue of a supernova remnant in which the ejecta is slowed down by the surrounding ISM. Like in SNRs external shocks can dissipate all the kinetic energy of the relativistic flow. On the other hand internal shocks are shocks within the flow itself. These take place when faster moving matter takes over a slower moving shell.
Sari and Piran
[370]
have shown that external shocks cannot produce
variable bursts (see also Fenimore et al.
[94]).
By variable I mean here, following
[370]
that 
t <<
T, where
T is the overall duration of the burst
(e.g. T90) and
t is the duration
of a typical pulse (see Section IIA2). As
most GRBs are variable Sari and Piran
[370]
concluded that most GRBs are produced by internal shocks
[334].
Internal shocks can dissipate only a fraction of the
kinetic energy. Therefore, they must be accompanied by external
shocks that follow and dissipate the remaining energy. This leads
to the internal-external shocks scenario
[314].
GRBs are produced by internal shocks within a relativistic flow.
Subsequent external shocks between the flow and the circum-burst
medium produce a smooth long lasting emission - the afterglow.
Various observations (see Section IIA6)
support this picture. I begin with the discussion with a comparison of
internal vs. external shocks. I review then the prompt emission
from internal shocks, then the prompt emission from external
shocks (which includes contributions to the late part of long GRBs
and the prompt optical flash). I also discuss the transition from
the observations of one shock to the other.