The comprehensive semiconductor laser simulator, Minilase, has been extended to simulate the dynamic response of vertical cavity surface emitting lasers (VCSELs). Unlike conventional rate equation approaches, Minilase is capable of correctly modelling nonlinear gain effects in the modulation response without the introduction of an empirical gain suppression factor. Various oxide-confined single-mode VCSEL structures are simulated with Minilase to examine the effects of real-space carrier transport on the modulation response in both vertical and lateral directions. It is demonstrated that a roll-off in the dynamic response is closely associated with the diffusion capacitance caused by vertical carrier leakage. By either grading the separate confinement regions or reducing the thickness of the SCH cavity, the vertical carrier leakage is shown to be greatly suppressed, and the modulation response is significantly improved. Simulations also reveal that the nonuniform HE11-like transverse optical intensity in the quantum well results in an overdamping of the relaxation oscillation, and this effect is greatly reduced by making the electrical aperture smaller than the optical aperture. Finally, a comparison with experimental results is presented and discussed.