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Two well-known problems that can cause performance degradations in IEEE 802.11 wireless networks are the exposed-node (EN) and hidden-node (HN) problems. Although there have been isolated and incidental studies of EN and HN, a comprehensive treatment has not been attempted. The contributions of this paper are threefold: First, we provide rigorous mathematical definitions for EN and HN in wireless networks (including wireless local area networks (WLANs) with multiple access points (APs) and ad hoc networks). Second, we relate EN to the nonscalability of network throughput and HN to unfair throughput distributions. Third, we provide schemes to eliminate EN and HN, respectively. We show that the standard 802.11 technology is not scalable because, due to EN, more APs do not yield higher total throughput. By removing EN, our schemes make it possible to achieve scalable throughput commensurate with the seminal theoretical results in  and . In addition, by removing HN, our schemes solve the performance problems triggered by HN, including throughput unfairness/starvation and rerouting instability.