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Equation 12 · Part 2 · Selection Accounting: The Price Equation Runs the Economy

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Ne≈321N_e \approx 321
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What this part means

Approximately equal to; the equality is not exact.

Its job in the formula

Approximately equal to; the equality is not exact.

The passage around this formula

The paper checks this with a seeded simulation rather than leaving it asymptotic. A competitive industry of 400 comparably sized firms (HHI = 0.0031, NeN_e ≈\approx 321 ) and a concentrated industry of 40 Zipf-distributed firms (HHI = 0.1006, NeN_e ≈\approx 10 ) were each run through 20,000 replicate neutral periods with no selection whatsoever operating. A reading of half a log point of apparent “selection” — the kind of magnitude an Olley-Pakes-style decomposition would report without hesitation as meaningful reallocation — occurred in 4.0 percent of neutral periods in the competitive industry and in 49.7 percent of neutral periods in the concentrated one. In an industry with an effective…

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