Left panel shows the solution for the aggregate markup \(\mathcal{M}_t\) with translog demand as a function of the effective mass of firms \(\bar{\sigma} N_t\) for various levels of the Pareto tail \(\xi\). Right panel shows how the parameter space is partitioned into regions where there are positive selection effects, \(z_t^*>1\), or no selection effects, \(z_t^*=1\). Whenever there are positive selection effects, the aggregate markup is constant at \(\mathcal{M}_t=1+1/\xi\). By contrast with identical firms, the aggregate markup would be given by \(1+1/\bar{\sigma} N_t\) as shown. With firm heterogeneity, the aggregate markup is decreasing in \(\bar{\sigma} N_t\) only if there are no selection effects, \(z_t^*=1\).