  The aim of this paper is threefold. First, it presents a multi-dimensional
Markovian state transition model characterizing the behavior of the IEEE 802.11
protocol at the Medium Access Control layer which accounts for packet
transmission failures due to channel errors modeling both saturated and
non-saturated traffic conditions. Second, it provides a throughput analysis of
the IEEE 802.11 protocol at the data link layer in both saturated and
non-saturated traffic conditions taking into account the impact of both the
physical propagation channel and multirate transmission in Rayleigh fading
environment. The general traffic model assumed is M/M/1/K. Finally, it shows
that the behavior of the throughput in non-saturated traffic conditions is a
linear combination of two system parameters; the payload size and the packet
rates, $\lambda^{(s)}$, of each contending station. The validity interval of
the proposed model is also derived.
  Simulation results closely match the theoretical derivations, confirming the
effectiveness of the proposed models.
