In this article, we show that four sets of differential Fay identities of an
N-component KP hierarchy derived from the bilinear relation satisfied by the
tau function of the hierarchy are sufficient to derive the auxiliary linear
equations for the wave functions. From this, we derive the Lax representation
for the N-component KP hierarchy, which are equations satisfied by some
pseudodifferential operators with matrix coefficients. Besides the Lax
equations with respect to the time variables proposed in \cite{2}, we also
obtain a set of equations relating different charge sectors, which can be
considered as a generalization of the modified KP hierarchy proposed in
\cite{3}.Comment: 19 page