Research Areas

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Environmental management modeling, electricity and gas distribution costs econometric analysis, public utilities optimization and pricing models, telephone flows analysis, urban and regional impact of new telecommunication technologies, population and employment density patterns.

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SIMULATING URBAN POPULATION DENSITY WITH A GRAVITY-BASED MODEL. Fahui Wang and Jean-Michel Guldmann, Socio-Economic Planning Sciences, Vol. 30, No. 4, 1996, pp. 245-256.

Theoretical justifications for the negative exponential urban density function were first proposed by urban economists, although some of their foundations have been criticized. From the geographer's perspective, the gravity-based model reported in this research uses a well-known concept (the "potential") to offer an alternative explanation. Using numerical analysis techniques, the model simulates various urban density patterns. By varying the model's parameters (the distance friction coefficient ß and the city size), the numerical simulations do confirm two important empirical findings: the flattening of density gradients over time due to transportation improvements, and flatter gradients in larger cities. The observed relationship between the ß value and the urban density gradient, as established by this research, opens an avenue for empirical testing.

RELIABILITY PRICING OF ELECTRIC POWER SERVICE: A PROBABILISTIC PRODUCTION COST MODELING APPROACH. Youssef Hegazy and Jean-Michel Guldmann, Energy-The International Journal, Vol. 21, No. 2, 1996, pp. 87-97.

We develop a pricing model for electric power service that accounts for customers' reliability preferences as well as the randomness of outages in the power-supply system. The model combines features of both reliability pricing and real-time pricing. A production cost simulation submodel is used to estimate expected total and marginal production costs on an hourly basis, as well as system reliability measured by the loss-of-load probability. These estimates are inputs to a welfare-maximization model with revenue constraints differentiated by customer class. The methodology is illustrated by a numerical application with typical power system and market data. The results show that the proposed pricing approach is significantly superior to spot and Ramsey pricing in terms of economic efficiency, energy conservation, and generation-capacity requirements.

 A SPATIAL EQUILIBRIUM MODEL FOR CITY SIZE, URBANIZATION RATIO AND RURAL STRUCTURE. Fahui Wand and Jean-Michel Guldmann, Environment and Planning A, Vol. 29, 1997, pp. 929-941.

Earlier economic models of city size have either focused on urban agglomeration effects while ignoring the spatial structure of the rural hinterland, or made unrealistic assumptions (e.g., uniform rural population distribution) so as to simplify the problem. Following the classic von Thunen's framework, this paper presents a two-sector spatial equilibrium model of a city located at the center of an agricultural hinterland. The city produces industrial goods, and the rural area produces agricultural goods. Both goods are consumed by both urban and rural residents. Market equilibrium for these goods determines: (1) the spatial size of the region, (2) the urbanization ratio (urban to total population) and the population size of the city, and (3) the rural spatial structure (wage, population distribution, land rent, and agricultural yield). Given various sets of exogenous parameters pertaining to the industrial, agricultural, and transportation production functions and to population preferences, the model is solved numerically, and response functions are estimated and analyzed.

INTERSECTORAL POINT-TO-POINT TELECOMMUNICATION FLOWS: THEORETICAL FRAMEWORK AND EMPIRICAL RESULTS. Jean-Michel Guldmann, Regional Science and Urban Economics, Vol. 28, No. 5, 1998, pp. 585-610.

Based on a theoretical framework that derives information flows associated to economic and social transactions, intersectoral, point-to-point telecommunication flow functions are specified and estimated, using a very large data base on intra-LATA toll calls and a simultaneous equation estimation procedure that accounts for the endogeneity of reverse call flows. The effects of prices, distances, and market sizes vary significantly across intersectoral interactions, and so does the impact of reverse calls, pointing to different cases of information complementarity and substitutability. Flows always decrease with distance, pointing to complementarity between transportation and telecommunications. The demand for messages is always price-inelastic, while the demand for conversation minutes is always elastic. Overall, intra-residential calling appears to be most sensitive to telecommunication prices. Several areas for further research are outlined.

POPULATION AND EMPLOYMENT DENSITY FUNCTIONS REVISITED: A SPATIAL INTERACTION APPROACH. Jean-Michel Guldmann and Fahui Wang, Papers in Regional Science, Vol. 77, No. 2, 1998, pp. 585-610.

The gravity-based Garin-Lowry model, which generates urban population and service employment distributions for a given pattern of basic employment, has often been used in case studies. However, few analytical results or general functional forms have been derived from it. To remedy this shortcoming, this paper proposes a generalized urban spatial structure and transportation network, and adapts the Garin?Lowry model to simulate both population and service employment densities in this hypothetical, yet realistic, city. The model is solved numerically while varying exogenous factors such as the distance friction coefficients and the spatial distribution of basic employment. The computed density functions often display regularities and features commonly observed in empirical density analyses. The results are generalized by estimating, via regression analysis, density functions over a large sample of simulated density patterns, pointing to the critical importance of transportation costs and basic employment distribution, and providing a basis for further empirical studies.

OPTIMIZING THE NATURAL GAS SUPPLY MIX OF LOCAL DISTRIBUTION UTILITIES. Jean-Michel Guldmann Fahui Wang, The European Journal of Operational Research, Vol. 112, 1999, pp. 598-612.

A large mixed-integer linear program (MILP) and a much smaller non-linear programming (NLP) approximation of the MILP, involving simulation and response surface estimation via regression analysis, are proposed to solve the problem of the optimal selection of natural gas supply contracts by local gas distribution utilities. Each potential supply source is characterized by several price and non-price parameters. Weather variability is the basic stochastic factor that drives the demand for gas by various market segments. The model minimizes the total cost of gas supply and market curtailment, and thus determines the size of the interruptible market. A numerical application of the methodology illustrates the excellent quality of the NLP approximation and the importance of the trade-offs between contract characteristics. A multi-temporal extension of the modeling methodology is outlined.

COMPETING DESTINATIONS AND INTERVENING OPPORTUNITIES INTERACTION MODELS OF INTER-CITY TELECOMMUNICATION FLOWS. Jean-Michel Guldmann, Papers in Regional Science, Vol. 78, 1999, pp. 179-194.

This research makes use of a large sample of individual telephone calls between local exchanges (cities, villages) within a U.S. region. The interlocational flows (number of conversation minutes) are analyzed by estimating, in a simultaneous equation framework, spatial interaction models that account for (1) the role of the spatial structure, which reflects the competition and agglomeration effects that take place among the flow destinations, and (2) the role of the reverse flows, which reflect the process of information creation necessary to complete economic and social transactions. A particular focus is set on Fotheringham's competing destinations model and Stouffer's intervening opportunities model. The implications of the results are discussed and areas for further research are outlined.

MODELING AIR QUALITY IN URBAN AREAS: A CELL-BASED STATISTICAL APPROACH. Hag-Yeol Kim and Jean-Michel Guldmann, Geographical Analysis, Vol. 33, No.2. 2001, pp. 156-180.

Statistical regression models are presented, that explain the observed variations, across urban areas, in the concentrations of two major pollutants, ozone and carbon monoxide. Model specification and estimation are based on an explicit and new spatial framework derived from the theoretical concept of well-mixed cells, whereby the basic Fickian system of diffusion equations is integrated over the regional space partitioned into a grid of large cells. The concentration in each cell results from the balance of pollutant flows into and out of this cell and of pollutant emissions and removal within that cell, and is expressed as the sum of two concentration contributions: (1) the local effect, dependent upon pollution-related factors around the measuring station, and (2) the regional effect, dependent upon pollutant flows originating outside the local area. A large data base is developed, making extensive use of GIS technology, to spatially relate such data as pollution measurements, meteorological factors, land-use characteristics, Census socio-economic data, and major highway network characteristics. The results confirm the appropriateness of the well-mixed cell framework, are in line with general knowledge regarding the determinants of ozone and carbon monoxide concentrations, and clarify the role of transportation, residential fuel-use, economic activities, natural environments, and meteorological factors such as temperature and solar radiation. About 50% of the variations in concentrations are explained by these models. Several areas of further research are outlined.

GIS IN COAL TRANSPORTATION MODELING: CASE STUDY OF OHIO.  Hanming Tu and Jean-Michel Guldmann, Geographical Information Systems, 2001, Vol. 7, No.1, pp. 24-34.

In order to reduce SO₂ emissions to less than 2.5 lbs/mBtu as mandated by the Clean Air Act Amendment (CAAA) of 1990, power companies mainly using higher sulfur content coal as fuel supplies have to find their alternatives to reduce SO₂ emissions. The purpose of the study is to assess the extent of economies of scale in coal delivery. The network of coal flow consists of production sites, consumption plants, routes, and costs of coal delivery. GIS as a new tool is used to help identifying and visualizing these routes. Different transportation modes are evaluated under different price schemes. The translog function with price homogeneity restrictions is used to assess the cost structure of the coal delivery system.

INTERNATIONAL WATER RESOURCES ALLOCATION AND CONFLICTS: THE CASE OF THE EUPHRATES AND TIGRIS. with M. Kucukmehmetoglu, Environment and Planning A, 2004 (forthcoming).

OPTIMIZING PATTERNS OF LAND USE TO REDUCE PEAK RUNOFF FLOW AND NONPOINT SOURCE POLLUTION WITH AN INTEGRATED HYDROLOGICAL AND LOND-USE MODEL with I.Y. Yeo and S.I. Gordon, Earth Interactions, 2004 (forthcoming).

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A GENERAL MIXED-INTEGER NONLINEAR OPTIMIZATION MODEL FOR HUB NETWORK DESIGN. Jean-Michel Guldmann and Guoqiang Shen.

 A general discrete hub network model that accounts for fixed, capacity, and operating/congestion costs on links and at hubs, with both economies and diseconomies of scale, selects hubs and links, determines their capacities, and assigns O-D flows over paths, while minimizing all system costs. Initially formulated as a mixed-integer non-linear program, the model is transformed into a mixed-integer linear program through the linearization of the capacity and congestion cost functions. The methodology is illustrated by an application to a small-scale network with hypothetical data. Extensive sensitivity analyses are carried out to assess the trade-offs between the different link and hub costs.

URBAN TRANSPORTATION NETWORK DESIGN, TRAFFIC ALLOCATION, AND AIR QUALITY CONTROL: AN INTEGRATED OPTIMIZATION APPROACH. Jean-Michel Guldmann and WoonSoo Kim.

 Air pollution and congestion externalities due to urban transportation are accounted for in an integrated nonlinear optimization model that selects road capacity expansion projects and allocates origin-destination traffic flows on network road links while minimizing a total cost function that includes (1) travel time costs, (2) roadway capacity expansion costs, and (3) car fuel consumption costs. In addition to traditional flow conservation and capacity constraints, the model includes emissions and ambient air quality (CO - carbon monoxide) constraints. The nonlinearities of the model are related to the relationships between (1) traffic speed and traffic flow, (2) fuel use and traffic speed, and (3) car pollution emission and traffic speed. The air quality constraints are based on a pollution transfer coefficient matrix, linking all road segments to all pollution receptors, and dependent upon local meteorology. The model is applied to a hypothetical, yet realistic urban configuration made of 24 residential areas generating commuting traffic flows toward the CBD. Actual meteorological data are used to compute the pollution transfer matrix. The model is solved using the GAMS system under (1) various intra-daily O-D flow conditions (peak vs. off-peak hours), (2) alternative hypotheses of differential urban growth, (3) various ambient CO standards, and (4) different wind speed conditions.

SPATIAL INTERACTION MODELS OF INTERNATIONAL TELECOMMUNICATION FLOWS. Jean-Michel Guldmann.

Despite the growing role of international telecommunications in the new global economy, the spatial structure of these flows, their socio-economic determinants, and their relationships with other international flows are not very well understood. This research makes use of a sample of 4137 country-to-country annual telephone flows (minutes of conversation) for the year 1995, involving 103 origin and 204 destination countries. This sample, obtained from the International Telecommunications Union (ITU), provides an opportunity for more comprehensive analyses and modeling than those in past related studies, where generally only one originating country is involved. These data are matched with country-to-country trade flows from the IMF, and country-level telecommunication (e.g., main lines, Internet hosts), socio-demographic, and economic variables obtained from the ITU, the UN Statistical Yearbook, and the CIA World Factbook. Various spatial interaction models are then estimated, involving several variables characterizing the origin and destination countries, great-circle distance, spatial contiguity, commonalities in language and religion, political and former colonial relationships, membership in special trade groups, and actual trade flows. In addition, intervening opportunities and competing destination variables are introduced into the model to test the effects of the international spatial structure on telephone flows. The results underscore the critical role of a country's (1) level of telecommunication equipment, (2) size of the business sector, (3) exports and imports, and (4) touristic attraction. The importance of distance, contiguity, commonalities in language and religion, and membership in culturally homogeneous regions and trade groups, is confirmed, as is the complex role of spatial structure. Among the most intriguing results is the empirical confirmation that electronic mail via the Internet may substitute for international telephone flows.

TELECOMMUNICATIONS INFRASTRUCTURE AND USAGE IN RURAL AREAS: A PRODUCTION FUNCTION APPROACH,  Jean-Michel Guldmann.

This research uses the production function theoretical framework and an extensive, exchange-level database on telephone usage and infrastructure, employment and population, to clarify the relationships between rural economic activities and telecommunications.  Relationships are estimated through regression analysis, linking telephone usage, measured in aggregate conversation seconds, by each of eleven economic sectors, to such variables as sectoral employment, rurality of the exchange, availability of advanced telecommunication infrastructure, regional core-periphery location of the exchange, and sectoral growth.  The results show that telecommunications and labor are, in most cases, complementary inputs in each sectoral production function, that rural activities use telecommunications less in the absence of advanced technology, but that the latter tend to significantly increase telecommunications usage.  This result tends to support the idea that an advanced telecommunication infrastructure in rural areas may be important to attract specific activities, particularly professional services, that make heavy use of telecommunications, and thus to promote rural economic development.  

SPATIAL ANALYSIS OF TELECOMMUNICATION FLOWS.  Jean-Michel Guldmann.

 Telecommunication systems carry information over space, in the same way as transportation systems carry goods and people.  In both cases, these movements are necessary to complete economic and social transactions, and can be viewed as derived demands. Telecommunication flows analysis may therefore provide empirical insights into the patterns of spatial interactions between individuals, businesses, cities, regions, and countries.  Various modeling techniques have been used, with real-world data and at various geographical scales, by economists, geographers, and other social scientists to better understand these patterns.  The purpose of this chapter is to critically review the literature dealing with telecommunication flows, focusing on both modeling techniques and empirical applications and results.  This review is organized along different geographical scales: local, regional, and international. The modeling techniques include: (1) aggregate, discrete choice, and spatial interaction (gravity) models; and (2) network and hierarchies analyses, using graph theory, Markov chains, and multivariate and clustering techniques.  A general spatial modeling framework is then proposed, within which the existing models can be nested, and which can provide the theoretical basis for further analyzing the structure of telecommunication flows and the spatial impacts of telecommunication technologies.

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1. Environmental Policy Initiative (EPI) at The Ohio State University. Summer Quarter Ph.D. Dissertation Proposal Grant, for Tae-Kyung Kim. $ 3,600. Summer 2001.

2. SBC Faculty Research Grant for the study: Internet Broadband Service Demand Analysis: Qualitative Choice Models of Household and Firm Behavior. (with E. Malecki), $ 28,681. July 2003- June 2004.

3. TELECOMMUNICATIONS INFRASTRUCTURE, BUSINESS LOCATION, AND LOCAL ECONOMIC DEVELOPMENT. Ameritech Foundation Fellowship. July 2000--June 2001. Funding: $21,000.

Using geographically disaggregated economic and telecommunication data at the county level across the U.S., this project will analyze (1) the two-way interactions between local economic development, as measured by total personal income and the outputs of various sectors, particularly producers services, and local telecommunications infrastructure (TI), as measured by the numbers of business access lines and Web URL addresses extracted from commercially available electronic telephone directories, (2) the role of TI in spurring employment growth in rural counties, and (3) the role of TI as catalyst for office relocation in metropolitan areas, from inner central city counties to suburban counties.

4. USING GEOGRAPHICAL INFORMATION SYSTEMS TO ESTIMATE MODELS OF URBAN AND REGIONAL AIR QUALITY. Urban Affairs and Urban Assistance Program, Ohio Board of Regents. July 1999--June 2000. Funding: $20,000.

Despite improvements in air quality as a result of the Clean Air Acts and their Amendments, about 80 Million people still lived, in 1995, in counties with violations of primary standards, designed to protect public health, particularly in the case of ozone (photochemical smog). Air quality planning and management are therefore still very much necessary, and related tools must be developed or improved to help policy makers in their decisions regarding emissions control and other factors, such as land-use and transportation planning, that have a strong bearing on air quality. A review of the literature points to a very heterogeneous set of approaches to air quality modeling, i.e., the quantification of the relationships between pollution emissions, atmospheric dispersion and chemical transformation, and the resulting ambient pollution concentrations, each generally focusing on a specific pollutant or issue. What appears as overall missing is a comprehensive integration of the national, regional, and local factors that influence air quality. We propose to implement a modeling approach that is a hybrid combination of various ideas and approaches in the current literature, and that would make use of the large number of relevant socio-economic, pollution, land-use, and meteorological data that are becoming more and more widely available, particularly through the Internet. We will build, for different pollutants, a data base that would merge these different data streams and allow for the statistical estimation, using nonlinear regression analysis, of models explaining observed concentrations at monitoring stations. The unit of observation would be a station located in an urban area (place). Surrounding regional monitoring stations would provide the data to account for large-scale regional and national sources, whereas the socio-economic, transportation, and meteorological characteristics of the urban area would be used as proxies to explain local pollution generation and dispersion. A GIS technology, ARC/INFO, will be used to map and combine the large amount of point (sources, stations), linear (road network), and polygonal (land uses) geographical information available. Once estimated, these models will be used for policy analyses and for the delineation of optimal air quality planning strategies.

5. TELECOMMUNICATIONS DEMAND AND IMPACTS IN THE REGIONAL ECONOMY. National Science Foundation, Geography and Regional Science Program, Division of Social, Behavioral and Economic Research. July 1998 -- June 2001. Funding: $85,514.

Telecommunication circuits are deemed the electronic highways of the modern economy, but very little is known on the flows they carry and the fundamental determinants of these flows (Staple and Mullins, 1989; Taylor, 1980, 1994; Abler, 1991). Likewise, telecommunications technologies are claimed to lead to a new urban and regional spatial organization (Graham and Marvin, 1996), but the empirical evidence is limited. The scarcity of empirical research in all the above areas has often been blamed on the difficulty in obtaining appropriate telecommunication data.

The purpose of this project is to increase our understanding of (1) the spatial structure and socio-economic determinants of regional, point-to-point telecommunication flows, and (2) the economic and locational impacts of telecommunications on urban and regional systems, through theoretically-based empirical analyses. The concepts of information functions and constraints associated to economic and social transactions are incorporated in profit and utility maximization models of the firm and the consumer, leading to general, spatialized functions of telecommunications demand, and to the explication of locational changes in the regional economy resulting from new telecommunications technologies. The project will use a very rich telephone calls data base provided by a U.S. telephone company and comprehensively covering a whole region. These data represent a 5% random sample of all toll calls in the region, with detailed information on each call (timing, duration, locations, etc.), and with the possibility to identify the economic sectors (SIC) of the caller and callee in each message, providing an unparalleled opportunity to model residential and business flows at a highly disaggregated intersectoral level, and to use these flows in impact analyses. Detailed data on the telecommunications infrastructure, including access lines, switching technologies, and connections to the fiber optics network, are also available. These telephone data will be interfaced with socio-economic, business, and transportation Census data, allowing for new quantitative approaches to analyze telecommunications demand and impacts. In order to carry the proposed analyses, both telephone and Census data will require extensive processing, and in particular the matching of telephone territorial subdivisions (the wire centers) with the various Census geographies. A GIS technology, ARC/INFO, will be used to implement this matching.

The first component of the project will involve the specification and estimation of new spatial interaction models of telecommunications flows, the analysis of which will expand knowledge on (1) the elasticities of flows to distance, prices, wages, and other socio-economic variables, (2) the nature of inter-industry spatial linkages (e.g., agglomeration effects), (3) the role of spatial structure, (4) the process of information exchanges between economic agents, and (5) how all these interactions vary over time. In addition, these models will be policy-relevant, as they can improve regulatory assessments of the impacts of new pricing policies, and particularly competition, in terms of changing demands, revenues, and consumers' surplus. They will also help forecast flows under alternative scenarios of regional population and economic growth. These forecasts can then be inputs into the process of telecommunications infrastructure (TI) planning, in which public authorities have taken an increasing interest in recent years.

The second component of the project will involve the specification and estimation of models measuring the impacts of telecommunications on: (1) rural development, particularly the role of the TI in spurring employment growth; (2) office relocation within metropolitan areas, particularly the role of TI and the resulting changes in telecommunication flows; (3) work-at-home (WAH), particularly the interactions between WAH, TI, and commuting; and (4) urban interdependencies, particularly changes in the urban hierarchy due to the location of footloose activities down the hierarchy and to the information exchanges of multilocational corporations. The knowledge produced by these models will help formulate policies on TI modernization, reduction of regional inequalities, and decentralization of activities.

6. COMMUTING FLOWS AND THE HIERARCHY OF EMPLOYMENT CENTERS IN OHIO'S METROPOLITAN AREAS. Urban Affairs and Urban Assistance Program, Ohio Board of Regents. July 1997--June 1998. Funding: $20,000.

A variety of criteria have been used to define and delineate employment centers in metropolitan areas, based on employment density, employment-population ratio, and total zonal employment, with very arbitrary cut-off points. The correct identification of employment centers is important in several respects. First, the estimation of polycentric population density functions depends on the distances to these centers, hence a huge potential for misspecification and incorrect assessment of future population distribution patterns. Second, the prediction of urban commuting also depends upon the proper identification of these centers. The issue is then: What is the optimal method to identify employment centers in urban areas?

This project proposes to test, with data on Ohio's metropolitan areas for both 1990 and 1980, an alternative approach to identify these centers, using the observed commuting flows, instead of arbitrary local criteria. As most urban zones include both employment and population, and thus can qualify as employment centers, it is necessary to create a hierarchy of employment centers. To do so, we will use various methods that have an established tradition in geography and have been used to analyze central place hierarchies. These methods, which have used various inter-city flows (e.g., migration, commuting, freight, telephone), may be regrouped into three categories: graph theory, Markov chains, and multivariate analysis methods. They have never, to the best of our knowledge, been applied to intra-metropolitan commuting, simply because such data were nonexistent or very difficult to obtain. These methods will be applied to the matrices of commuting flows for all of Ohio's metropolitan areas and an "optimal" hierarchy of traffic zones will be delineated. These zones will then be clustered into employment centers of different levels, and their internal structure analyzed. This hierarchy of centers will be compared with the sets of centers obtained with other criteria, and will be used to re-estimate population and employment density functions. Comparisons of goodness-of-fit among models using different center definitions will provide an overall assessment of the proposed approach.

7. INTERACTIONS BETWEEN INTERNATIONAL TELECOMMUNICATIONS AND TRADE FLOWS. Ameritech Foundation Fellowship. July 1996--June 1997. Funding: $14,000.

International telecommunications, spurred by expanding international trade, internationalization of production in many industries and the resulting demand for rapid information transfer, large-scale tourism and other migrations, and other growing social and cultural exchanges, have increased significantly in recent years. For instance, the number of U.S.-originating minutes of international telephone service has increased at an average annual rate of 16.5% since 1980, representing now a $3 billion market.eroded the role of telex service.

While we are clearly moving towards an international information economy, it is surprising, however, to find out that there has been relatively little research on the structure and recent changes in international telecommunication demand, the geographic distribution of this traffic, and the relationship between telecommunication flows and other international flows, such as trade, capital exchanges, and short-term (tourism) and long-term migrations. While some form of a trade variable appears in several econometric models, it is always as a causative factor of telecommunications, and never the reverse. It is however clear that telecommunications have fast become a facilitator in trade of goods and services through their use in inventory control, trade documentation, and other electronic data interchange (EDI) activities, and are now providing a strong impetus for trade expansion. In other words, there is a two-way relationship between international telecommunications and trade that has never been explored. The purpose of this project is to assess this relationship through the econometric estimation of systems of equations describing both telecommunication and trade flows, making use of several data sources, both aggregate and disaggregate. These equations could then be used for forecasting telecommunication and trade flows, and particularly the multiplier effect of telecommunication investments on international trade and worldwide economic growth.

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