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The concept of Active Queue Management (AQM), broadly used in Internet Congestion Control, has been recently introduced to ad hoc wireless networks as a means to mitigate the severe TCP unfairness across flows. In particular, Neighborhood RED (NRED) has been proposed as an extension to the Random Early Detection (RED) mechanism with the goal of ensuring fair bandwidth allocation across flows in the networks. NRED provides improvements but suffers from limitations that can make its broad implementation difficult. This paper describes two fundamental principles governing neighborhood congestion among TCP flows in ad hoc wireless networks which are exploited to develop an improved control mechanism. The first principle indicates that the likelihood of the channel being captured by a node grows exponentially with the disparity between the node's channel utilization and the expected utilization level. The second principle indicates that traditional random packet marking in NRED leads to reduced fairness across flows, pointing to a simple dropping/marking strategy based on the concept of error diffusion where packet marks are spread apart as homogeneously as possible. The power of these fundamental principles is demonstrated in a Congestion Control scheme referred to as Neighborhood Diffusion Early Marking (NDEM) which results in a more efficient bandwidth distribution compared to NRED.