| Intercooling decreases the air tempreature of air entering an engine, allowing more oxygen to participate in the combustion cycle.
A decrease in air intake temperature provides a denser intake charge to the engine and allows more air and fuel to be combusted per engine cycle, increasing the output power of the engine.
You can read more about intercooling at:
http://en.wikipedia.org/wiki/Intercooler
http://auto.howstuffworks.com/question3951.htm
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