Inflammation is thought to be involved in Male Pattern Balding. Inflammation is a reaction by the body to virtually any trauma. In the case of hair loss it is thought to be a type of auto-immune response where a balding person's immune system kicks into overdrive attacking the follicles. DHT plays a role in the process of this response but the process is not clearly understood.
In hair loss the process works similar to what is depicted below, except rather than a wound, the hair follicle itself is attacked. Mast cells and PGD2 are involved and have been shown to inhibit growth of hair follicles.
Similar to the wound below, histamines are released causing a chain reaction of events leading to the attack of the follicle.