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A methodology to design the range policy of adaptive cruise control vehicles and its companion servoloop control algorithm is presented in this paper. A nonlinear range policy for improved traffic flow stability and string stability is proposed and its performance is compared against the constant time headway policy, the range policy employed by human drivers, and the Greenshields policy. The proposed range policy is obtained through an optimization procedure with traffic flow and stability constraints. A complementary controller is then designed based on the sliding mode technique. Microscopic simulation results show that stable traffic flow is achieved by the proposed method up to a significantly higher traffic density.