Step 1: What is transportation lag?
Also called time delay, it is represented as $e^{-sT}$ in Laplace domain. Step 2: Effect on system response.
This causes a phase lag without affecting the gain magnitude, pushing the Nyquist plot closer to the critical point. Step 3: Consequence on stability.
Time delay:
- Does not affect gain margin
- Reduces phase margin
- Hence reduces the margin of stability and may cause oscillations Conclusion: Transportation lag $\boxed{\text{decreases margin of stability}}$