Transpn. Res.-A, Vol. 26A, No. 2, pp. 211-221, 1992
Printed in Great Britain.
0191-2607/92 $5.00 + .00
@ 1992 Pergamon Press Ltd.
H I G H - S P E E D R A I L W A Y A N D THE E U R O P E A N PERIPHERIES:
OPPORTUNITIES AND CHALLENGES
ULRICH BLUM
University of Bamberg, P.O. Box 1549, 8600 Bamberg, Germany
HALUK GERCEK
Technical University of Istanbul, Civil Engineering Faculty, 80626 Ayazaga, Istanbul, Turkey
and
Jose VIEGAS
CESUR-Instituto Superior Tecnico, Avenida Rovisco Pais, 1000 Lisboa, Portugal
A b s t r a c t - T h e analysis covers the organization of economic activities and how the supply of transporta-
tion systems influences the definition of markets. From a spatial perspective, competition and collusion
in a high-speed railway (HSR) based network are examined at three levels: (a) the chain of regions
served; (b) the chain of cities (railway stations) served; (c) the (chain of) transportation modes involved.
Finally, the theoretical part of the analysis looks at the strategic importance of a sequential implementation of network links. The empirical part addresses three cases of peripheries with distinctly different
characteristics. It shows that the arguments developed in the first part provide a solid approach to solve
the problems leading to different configurations of the recommended system.
INTRODUCTION
In West Germany and in France, interest in HighSpeed Railway (HSR) systems arose when mediumdistance relations between cities proved to be inefficiently served by plane, due to problems of
congestion. Because of their long-standing railway
tradition, France and Germany, in particular the former, were able to put their high-speed systems into
place quickly, and discovered that these systems
function in an economically satisfactory way. HighSpeed Railway systems were subsequently recognized
as one of the more important elements for a European integration. Interest has grown tremendously
to fill the missing links in the system (Fig. 1).
Today, governments are under pressure by businessmen, environmentalists, and the transportation
industry to develop a European network for highspeed passenger and freight services and to fill the
missing links. The prevalent undersupply of links is
the result of (a) geo- and topographical barriers: the
Alps, the Channel, or the Baltic Sea; (b) political
competition and technical differences: border crossings, crossings to non-EC member states, differences
in track gauge, clearances or electricity supply; (c)
economic reasons: the demand in certain areas is not
sufficiently large to economically justify the construction of new links.
As far as the "Common Transport Policy" (CTP)
of the European Community is concerned, the railway systems of 12 different European countries show
a wide range of operational, financial, and investment circumstances, highlighting some of the CTP's
problems. The CTP has failed to appreciate the importance of railways as a means of moving freight
and people, and furthermore, has failed to support
member states who were and are struggling with financial problems (Whitelegg, 1988).
The present situation necessitates some additional
planning on the major corridors. The recent development of conditions for a Europe-wide cooperation
permits a smoother integration of Greece and Turkey
into a network with important nodes and links lying
in the former Eastern-Bloc Countries. The role of
cities like Berlin, Warsaw, Prag, or Budapest needs
to be culturally and economically reassessed. Common carriage should include those countries which,
by their inferior road transportation infrastructure,
have a productivity advantage in their train system.
In this paper we will inquire about the structure
of the competition process of the transportation sector and aim at an answer to the following questions:
(a) why have high-speed railways become a sort of
"new wave thinking"? We believe that the answers to
this question can be found in scale economies of the
industry and transport systems, global environmental concerns, and pressure from the rolling-stock industry. These elements taken together have created a
political will towards integration. In the present paper, we will identify and discuss the factors that have
affected the development of the HSR network. (b)
what are the constraints in implementing a HSR system? First, constraints are mainly based on the infrastructure and the rolling stock. Among the major
problems are concerns about the degree of standardization and integration of the network. Furthermore,
there are missing links with other transport networks
that would allow for a higher sophistication of combined transportation means. Due to their existing
stocks and depreciations, many national systems are
caught in a trajectory that hinders integration. Second, constraints are subject to the global integration
211
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High-speed railways
range from financial, to economic and political topics. The table is certainly not exhaustive but outlines
a first attempt to categorize the problem.
What conclusions can we draw from the table?
In the Central European regions where rapid HSR
developments have taken place, financial and economic factors, such as competition in the transportation market and among regions, are more effective.
However, political will towards integration is the
most stimulating factor for HSR projects in peripheral countries. Consequently, economic theory of location might be used to formulate the interactions
between central regions. If the results obtained from
this approach are applied to peripheries, in which
political forces are dominant in the decision-making
process, they would be useless. More information on
this subject will be given later on.
of the transportation system. Again, we are faced
with different norms and standards. The debate on
deregulation and harmonization has partly made us
forget the issue of integration. The type of management, priority rulings, and different approaches towards deregulation found in various European countries all point to an organizational problem. Finally,
we may point to local environmental concerns arising
from the building of high-speed links or the retooling
of existing ones. These disadvantages are different
from those arising from the building of rail tracks,
cargo, especially container facilities, etc. (c) how can
we build a model that will account for an interaction
of the basic parameters trying to explain the developments of the HSR networks in different regions?
Spatially, HSR networks or network components in
central regions (i.e. Germany, France or Italy) can be
identified. New developments in peripheral countries
(i.e. the Iberian Peninsula [Spain and Portugal] or
the Balkan Peninsula [Greece and Turkey]) can be
pointed out.
In doing so, we assume that the achieving of sustainable economic growth and the integration of peripheries is among the aims of transportation policies. We thus presume that transportation policies
may lead to or increase spatial polarization effects
with adverse consequences for integration if improperly set in place.
Modelling the competition process
We model the competition process in four different layers: (a) the definition of competition in time
and space; (b) regional competition for attractive
corridor proposals and hierarchy; (c) competition for
local terminals in defined corridors; (d) competition
on the operative level.
First, we distinguish among three types of competition related to the implementation of HSR systems:
competition among regions striving to form convenient alliances to create attractive corridor proposals; competition among cities for getting a railway
station (once corridors have been established); competition among carriers offering different connections and/or types of services in a shared infrastructure (once stations have been established).
Given these conditions, one could then see the
transportation system as an integration of subsystems that are in themselves optimal for different trip
purposes and regional sizes. This can be incorporated as follows into a model of monopolistic competition following the spatial theory proposed by L6sch
(1940): It is supposed that for all production levels
(here: sizes of a region) the optimal technology (for
transportation) is used; consequently, the envelope
of all average cost function exhibits increasing returns to scale, as each consecutive average cost function has a minimum at a lower price. The spatial
MODELLING HIGH-SPEED RAILWAY DEVELOPMENT
A typology of high-speed railway development
Factors that have affected the development of the
HSR networks in Europe can be considered at two
different levels, corresponding to the geographical
situations given above. Table 1 shows the extent to
which each of the factors considered affects the development of the HSR network in central and peripheral regions at both the national and the European level. European scale represents a "top down"
(TD), whereas the national (or the regional) scale
represents a "bottom up" (BU) effect. Two pluses
represent a more pronounced effect of the row factor. The factors are listed in order of the extent to
which they represent considerations, varying in their
Table 1. Factors affecting HSR development in Europe
Central Regions
Peripheral Regions
National
Scale
European
Scale
National
Scale
European
Scale
Factors
(BU)
(TD)
(BU)
(TD)
Competition with other modes
High financial performance of the HSR
links
Technological development and pressure
from industry
Global environment considerations
Regional competition and political will to
integration
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214
U. BLUM, H. G E R C E K ,
demand curve is obtained by integrating f.o.b, demand over the market area. The maximum size is
obtained at the point where the two curves intersect.
Once the size of the region is reduced, the spatial
demand curve bends inwards and the smallest market
is reached if the demand curve is tangential to the
envelope of average cost curves (Fig. 2).
We see that, if the demand becomes more elastic
with respect to prices, the slope of the demand curve
will become flatter and the area to be served increases (in terms of kilometers or travel time). Furthermore, collusion, for instance, if a chain of regions for a high-speed track is formed, will reduce
fixed costs and, thus, increase the market area
through a lower envelope curve.
Consequently, we can picture a hierarchical transportation system with overlapping infrastructures as
an economically efficient setting. On the lower level,
we will find mass transit systems of municipalities or
regions (e.g. RATP in Paris, MVV in Munich, etc).
They support short-distance trip purposes and serve
as "feeders" for the next higher level. On the intermediate level, we will find the present national systems
serving as links between high- and medium-ranked
central places. They also serve as "feeders" to the
next higher level. On the upper level, we foresee an
European Carriage Organisation that will arrange
high-speed Intercity transportation links between
high-ranked central places in Europe, for instance
an extension of the German EuroCity system.
The first and the second, or the second and the
third systems, respectively, may use the same tracks
and, consequently, support a system of common carriage; however, crowding-out effects and priority
ruling may become problems. Separate tracks for the
upper level may be difficult to install.
It is obvious that areas served by a high-speed
systems, only, are not very interested in the implementation of a HSR system. However, efficient
stops are contradictory to small intervals. The situation may be depicted by the graph in Fig. 3 that we
adapted from the concept of efficient oligopolistic
competition (Kantzenbach, 1967).
If the distance is very large and no competition
price of
trip
and J. VIEGAS
exists, two terminals become economically feasible.
The more the distance shrinks, the more two locations will compete for an access to the transportation
system. If they are extremely close and noncooperative, competition will peak.
If, however, they choose to collude, say by demanding of the transport authority that passage will
only be granted if trains stop in an overlapping way
always at either place, or that the location not directly served gets compensation (e.g. a high-speed
access) both sides can win. This strategy, of course,
becomes more efficient the closer the two places are.
It may then be efficient to allow or even encourage operative competition within different levels of
the hierarchy. Let us assume that each operator sinks
costs if he enters operation at any level of the hierarchy1: sunk costs will deter any contestant if the incumbent threatens him with fierce competition. This
implies that a regime must be found to facilitate market entry.
Let us assume that one operator serves two levels
of the hierarchy. Now, if a contestant wants to enter
the market the incumbent will threaten him with
fierce competition: this will not only depress prices
in the market, which they compete for, but also in
the other market, which is (at least to a limited extent) substitutive. To drive the contestant out of one
market, the incumbent would risk to ruin his other
market. In the end, the incumbent may even leave
the market, which was contested, to the challenger
unless exit costs are too high. A sustainable solution
would reflect the hierarchical structure proposed before. If, finally, the concept presented above holds
true, higher competition will result as operators offer
services in different modes.
The fact that faster travelling speed calls for
greater distances between stops (served points), creates larger regions, which are not directly served.
This raises the need for more complex service patterns; first, within the railway mode, with several
less important stations on a high-speed line being
served by a fraction of the trains that pass there.
~For the general idea behind this concept, see Judd
(1985).
A
spatial demand
~function
cost f
u
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t
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Fig. 2. Spatial demand and optimal transportation area.
High-speed railways
intensity
of regional
competition
for a
terminal
215
~Non-Cooperative
Competition
Coo
Competition
/
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distance
between stops
Fig. 3. Cooperative and noncooperative spatial competition.
However, the capacity of the line is severely restricted by the presence of trains with substantial
differences in their commercial speed (i.e. including
stops). This means that the railway alone will not
guarantee a sufficient coverage, even of the regions it
directly crosses. Roads, and particularly motorways,
with a much stronger presence all over the territory,
will have to come into play to assure the connection
of main stations. This is valid not only for the zones
along the line (without stations), but also, and especially, for the zones between two high-speed railway
corridors. In both cases, integrated services with
high-quality coach buses as feeders to the railway
system will certainly have a good chance in the
market.
The same concept of modal integration can also
be applied to the upper speed range; in that case, the
high-speed railway will serve (long-distance) flights.
This point shall be developed further in a section
dedicated to the presentation of the situation in peripheral regions.
HIGH-SPEED RAILWAY DYNAMICS IN EUROPE
The sectoral economic challenge
Sectoral developments in advanced economies,
such as the European Community and its neighboring western (and very soon also eastern) countries,
rely on and further mobility. The functioning of a
complex society rests on face-to-face contacts. The
decentralization of decision-making, the reduction
of warehouse stocks, and the increasing specific
value of transportation goods, all required an advanced (i.e. fast and flexible) transportation system.
A high-speed railway system (passengers and goods)
also enhances an efficient cooperation with cars and
trucks.
argument). They are one of the major ways to
change the relative economic positions of r e g i o n s of course, we know that localization and substitution
are connected processes.
The EC and the EFTA member states have noticed this problem and agreed on a three-step program for the development of a high-speed rail system
in Western Europe; the first two steps involve investments of 43 and 58 billion ECU until the years 1995
and 2005, respectively; with a "last leg" of investment
of 90 billion ECU, the travel time on most European
connections is forecasted to be halved compared to
the present situation (UIC, 1989).
Many regions consider this to be a "new deal,"
with respect to locational qualities; the winners and
the losers of this process and their vested interests
can already be identified. A special concern of peripheral regions is that they may become even more
peripheral.
The environmental challenge
The improvement of the environment is one of
the most important objectives of all governments,
and transportation is one of the major polluters. The
development of transportation volumes stemming
from the integration in Europe is a challenge that
offers new changes to the railway system. The rail is
not only a competitor to the car over medium and
long distances, but also to the plane. Whereas the
former, especially in the summer, encounters its capacity limits, the latter is among the fastest growing
industries with detrimental environmental effects as
the exhaust fumes partly penetrate the delicate tropopause of the atmosphere. If all external costs were
internalized, as it is the long-term aim of the transportation ministers, the railroad systems will gain
tremendous competitiveness.
The regional economic challenge
The implementation problem and aspects of a
solution
Transportation investments have always been and
always will be a means of regional access (supply
argument) and a reduction of bottlenecks (demand
Among the major problems of building new or
improving existing tracks is the uneven distribution
of opportunities in space. Cities with stations set-
216
U. BLUM, H. GERCEK, and J. VIEGAS
viced by high-speed trains will gain in economic momentum whereas those that do not have any access
o r - e v e n worse-lose access as they are no longer
served, will be disadvantaged. As the tracks have to
pass some of these regions, fierce opposition emerges
that either will stop the building of the high-speed
system or demand compensation: tracks versus stations. The discussion in Belgium on the TGV ParisCologne, in Germany on the new tracks for the ICE
between Cologne and Frankfurt or between Nuremberg and Munich give ample evidence and support
the theoretical model given in the second section.
This implies that new strategies must be found to
get regions that are situated along the high-speed
tracks, yet do not have a direct access interested in
the development of this new infrastructure. Common carriage of the high-speed systems could give
room for organizational efforts and build a momentum for the national authorities to improve feeder
systems.
PERIPHERAL REGIONS AND THEIR INTEGRATION
Types o f periphery
We have identified three types of geographic peripheries, which we think are worth analysing in this
context: (a) Periphery turns into a center: the German case; (b) Periphery turns more peripheral? the
Portuguese case; (c) Peripheries as attracting points:
Greece and Turkey.
Periphery turns center
The unification of Germany turns areas which
formerly were peripheral because of their proximity
to the East into (geographically, not necessarily economically) central regions. The question is, whether
this change is reflected by new economic opportunities and by changes in priorities concerning the construction of high-speed links.
We have estimated the potential of a new EastWest Corridor that services Berlin in a European
HSR system (Fig. 4). We have based our assumptions on a full integration of East Germany into the
EC, and on the levelling out of income differences
between the Western and the Eastern provinces of
Germany (Blum et al., 1990).
Total long-distance rail traffic between the southern and the western parts of Germany, on the one
hand, and the eastern part, on the other hand (i.e.
traffic between what was the old Federal Republic
and the old GDR, will amount to roughly 43 million
passenger trips in the year 2010).
Based on the same data, we have calculated the
traffic volume between the East-West Corridor that
extends from Moscow-Warsaw-Berlin-HannoverCologne to Belgium, the southern Netherlands, parts
of France, and the British Isles (Fig. 4). We have
estimated the transportation volume between Hannover and Berlin, which results in a volume of 12
million trips in that corridor. Especially the share of
foreigners has been evaluated on a rather conservative level; it amounts only to roughly 5°70- t h i s , how-
ever, could rise tremendously once an international
carrier service is implemented. A North-South corridor would carry 15 million trips.
Periphery becomes more peripheral
In the extreme South-West of Europe, some regions of the Iberian Peninsula are understandably
rethinking their strategies for physical and economic
integration with the European core (Fig. 5). With the
exception of Barcelona (and to a minor extent Madrid and Seville), the rest of Spain and Portugal will
suffer a comparative loss of accessibility with respect
to many other regions in Europe. In particularly sensitive positions are the north and west coasts of the
peninsula, encompassing the regions of Asturia and
Galicia in Spain, and the whole of Portugal.
A low density of HSR network (thus poor access
to services) will be added to long geographical distances (i.e. long travel times). The risk of reperipheralization is very real, especially, because the construction of high-speed railways in Europe will take
several decades and will probably start with an emphasis on the more central (and profitable) links. As
the network is being built, the relative difference in
attractiveness of these peripheral regions will diminish, and, as a consequence, the likelihood will decrease that the high-speed connections between the
core of Europe and these regions will be built.
The answer to this problem can be found by going
back to the root of the problem and rediscovering
that the role of HSR transportation is to be found in
distances ranging up to 1,000 km (for daytime trips,
at least). This means that these peripheral regions
must not embark on a dream of easy passenger connection to central Europe if only they could have
their HSR systems.
Passenger connections during the present generation of trains between these peripheries and central
Europe are guaranteed by the aeroplane. Does this
mean that HSRs will not play an important role in
the peripheries? On the contrary, this form of transport is very important to integrate these peripheral
territories and to give them (jointly working) mass
that makes them competitive on an European scale.
One of the major aspects of this territorial integration is related to the modal integration of the
HSR to the air transportation system, making international airports some of the most important nodes
in the HSR network. This will allow for a concentration of international flights in a smaller number of
airports; however, with heavier service frequencies,
which normally constitute one of the weak points in
the external accessibility of peripheral regions.
Particularly in the Portuguese case, taking advantage of the fact that both Lisboa and Porto airports
are approaching their capacity limits, it is proposed
that there will be only one International Airport in
continental Portugal (apart from Faro, almost exclusively dedicated to charter flights), located about
halfway between the two main cities.
Since these two cities of Lisboa and Porto are
High-speed railways
217
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located at a distance of about 320 km from each
other, the International Airport would be the only
intermediate stop on the high-speed train, with a
travel time of about 45 min on each span. The role
of feeding traffic from the rest of the country to the
airport would be performed by the current railway
lines (some of them are running at speeds between
100 and 160 km/h), and the motorway system. Both
of these systems already have their strong axes along
the Lisboa-Porto corridor, with easy connection to
the location where the new airport would be built.
This scheme would not only substantially reinforce the economic competitiveness of the Portuguese coastal region, but would also strongly increase its accessibility to central Europe, thanks to
the higher number of flights available at the same
airport. As mentioned above, modal integration
plays an important role in this strategy, with interventions from modes working at speeds both above
and below the HSR.
HSR connections to other countries (for passen-
gers) have a limited interest for Portugal. The main
destination will certainly be Madrid, for which several alternative lines have been proposed; some favoring the connection from Lisboa, some favoring
Porto and the north of the country. The interesting
point is that, once the concept of the Lisboa-Porto
high-speed line with an airport in the middle is accepted, it becomes obvious that access to Madrid
must be made from that central point (see Fig. 6),
which is located at almost the same latitude as Madrid and promotes a strong increase of accessibility
to both Lisboa and Porto.
Finally, and in a longer term, a HSR connection
from Lisboa to Seville should be contemplated, given
not only the dimension of these regions, but also the
access to North Africa that could be obtained via
this line.
Peripheries as attraction points
If we look at the situation of the peripheral countries such as Greece, Turkey, and Yugoslavia on the
218
U. BLUM,H. GERCEK,and J. VIEOAS
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Fig. 5. The Iberian peninsula.
Balkan peninsula, we can identify a number of characteristics of this region, which should be considered
in the context of an integrated European transportation system.
First, the area geographically occupies a fringe
position in Europe, and distances that must be covered to reach other European centers are considerable. In fact, the largest metropolitan cities such as
Istanbul and Athens are more than 2,000 km away
from the "core" network of the HSRs in central Europe. For passenger transportation, this is obviously
a distance range over which air is the dominant mode
in the market.
On an European level, the market segment in
which there is strong competition and where the railway has a chance of acquiring high market shares
in passenger transportation presently is: (a) daytime
service with one- to four-hour journey times over
distances from 200 to 800 kin; (b) night services with
journey times of 8 to 12 hours over distances of 1,500
km and more (see Fig. 7).
Second, Greece is the only EC member of this
region that has to be integrated into the Community's high-speed networks. In this respect, Greece's
situation is somewhat similar to that of Spain and
Portugal on the Iberian Peninsula.
Third, by the year 2000, Istanbul, with an estimated population of over 10 million people, will constitute a strong international center of commerce and
tourism. Additionally, the city geographically forms
a bridge between the major transit route of Europe
and the Middle East. With the intent of capturing a
share of the Middle East rail traffic, Greece has
started to develop a railport at Volos, and Turkey
has completed a feasibility study for the Bosphorus
Railway Tunnel (Gercek, 1990).
The integration of the peripheral countries on the
Balkan peninsula is a medium- to long-term political
issue. In fact, the Commission's objectives spelled
out in 1986 for a "medium-term transport infrastructure policy" include the integration of the peripheral
regions into the Community's network and the construction of high-speed rail links between the main
cities (Whitelegg, 1988). The European Directory
Plan of Infrastructure (PDEI), which was produced
by the International Union of Railways (UIC) and
updated for several times since 1973, covered a network of 40,000 km and identifies a number of axes
of further development. Among them are the HSR
links connecting Athens and Istanbul to Beograd
(Whitelegg, 1988). These links are also included in
the map provided by the European Agreement on
High-speed railways
219
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220
U. BLUM, H. GERCEK,and J. VIEGAS
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Fig. 7. Passenger market shares of air, road, and rail (Cavagnaro et al., 1989).
Main International Railway Lines (AGC, 1985),
which covers the most important links from an international point of view.
Moreover, very recently, a project called the
Trans-European North-South Railway (TER) was
proposed for this region (Morawski and Wieladek,
1989). The proposed railway system, together with
the Trans-European North-South Motorway (TEM)
is already under construction and will extend from
the Baltic to the Adriatic coast; from the Agean Sea
to the Black Sea; and to the interior of Turkey with
further connections to the Middle East. With the
proposed regional transportation development project of the Mediterranean Basin, it is expected to provide better links for passenger and freight transportation in a region stretching from northern and
central Europe to the Middle East and Africa (see
Fig. 1). In fact, the EC foresees heavy demands in
the Mediterranean region, " t o remove the Mediterranean from the periphery of Europe and develop its
potential as a commercial crossroad between north
and south" (EEC-Commission, 1982, p. 5). The TER
covers countries in the majority of which it is necessary to greatly accelerate the development and modernization of both the network infrastructure as well
as the economic and the operational conditions of
the railways.
We may compare the geographical situation of
the countries and the relatively poor conditions of
their infrastructure and their organization of the railway with the rapid development of competing
m o d e s - m a i n l y road and a i r - i n this region. Then,
we must conclude that in a long-term view of over
15 years, the axes connecting Istanbul and Athens to
the central HSR network at Vienna via Beograd and
Budapest are of primary importance for the integration of this region into the European HSR system.
CONCLUSIONS
The general conclusion of our findings is that different departing conditions necessitate different
strategies, especially if peripheries are concerned
with distinct regional structures.
Additionally, a strong emphasis should be placed
on the integrative effects of HSR, especially with
respect to economies of scale and scope that they
exploit, but also stimulate; the latter, however, necessitates the inclusion of feeder systems and other
modes into consideration.
We have stressed the importance of properly accounting for the political environment, with respect
to a rivalry among regions and the competition in
transportation. This implies that policy-adaptive
strategies must try to structure the resulting problems
once the planning of a HSR system has started.
Finally, we have demonstrated that "island solutions" are economically feasible and sustainable.
This is especially worth noting because it runs against
the prevailing view that a network should be developed from its center.
A c k n o w l e d g e m e n t s - T h e authors are indebted to the Euro-
pean Science Foundation for its support of this research
and to an anonymous referee for valuable suggestions.
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