In this work, we study the performance of the IEEE 802.11 MAC protocol and its impact on the transport layer performance in multihop wireless ad-hoc networks. We focus on the hidden node problem that effects heavily the end-to-end delay and the packet loss probability. Through a mathematical analysis, we compute the packet loss probability as a function of the load. We develop a simplified model of a multihop wireless network and we use it to analyze the interaction between collision and congestion. We find that reducing the size of the MAC output queue can increase the applications throughput. This is done by setting the adequate buffer size that makes congestions and collisions operate in the same region. This will also allow closed or open-loop control protocols such as TCP to react correctly to losses caused by collisions as well as losses caused by buffer overflow. Simulation results with TCP traffic corroborate our theoretical analysis.