formulated and estimated, we first provide the reader with a description of the data use and then the empirical strategy.

# The INEGI INPC microdata

The data are a time series of urban retail prices collected by the Mexican Institute of Statistics, INEGI (Spanish acronym), originally collected bi-weekly to estimate consumer price indexes. Geographic data are mapped to the price data to have information on the location where the data were collected and to exploit heterogeneity in location characteristics in the analysis. There is also information on the type of outlets from which these retail prices were collected and this information is used in the analysis as well.

In addition to understanding the patterns of how markets work, this novel retail price data set is also used to identify and understand how entry of large retailer stores affected the performance of the retail markets these new stores serve compared to those they do not. In addition, using the same micro-level price data, this research identifies and explains the effect of competition policy changes.

The database used to study the functioning of markets consists of time series of retail prices collected by INEGI used for the computation of Mexico’s consumer price index (INPC). The INPC is published every two weeks and takes price quotes from 46 cities. The prices of cement are supplemented with INEGI’s database on residential construction prices, which has the same characteristics as the INPC data, but with fewer observations within cities. The period covered in this study goes from January 2010 to December 2015.

Table 1. Cities and Regions in the INEGI INPC database

|**Region**|**City**|**Abbrev.**|**State**|**Region**|**City**|**Abbrev.**|**State**|
|---|---|---|---|---|---|---|---|
||Mexicali<br>~~Tijuana~~|MXL<br>~~TIJ~~|Baja California||Acapulco<br>~~Iguala~~|ACA<br>~~IGU~~|Guerrero|
|Northern|~~La Paz~~|~~LAP~~|~~Baja California Sur~~||~~Tulancingo~~|~~TUL~~|~~Hidalgo~~|
|border|~~Acuña~~|~~ACU~~|~~Coahuila~~||~~Toluca~~|~~TOL~~|~~State of Mexico~~|
||~~Juarez~~|~~JUA~~|~~Chihuahua~~|Center‐|~~Cuernavaca~~|~~CUE~~|~~Morelos~~|
||Matamoros|MAT|Tamaulipas|south|Puebla|PUE|Puebla|
||Tepic|TPC|Nayarit||~~Tlaxcala~~|~~TLAX~~|~~Tlaxcala~~|
|Nh|Culiacan|CUL|Sinaloa||~~Veracruz~~|~~VER~~||
|ortwes~~t~~|~~Hermosillo~~|~~HMO~~|||Cordoba|COR|Veracruz|
||Huatabampo|HUA|Sonora||San Andres Tuxtla|SAT||
||Torreon|TOR|Chil||~~Campeche~~|~~CAMP~~|~~Campeche~~|
||~~Monclova~~|~~MVA~~|oaua||~~Tapachula~~|~~TAP~~|~~Chiapas~~|
||Chihuahua|CHIH|Chihh||~~Oaxaca~~|~~O~~AX|O|
||Jimenez|JIM|uaua|South|Tehuantepec|TEU|axaca|
|Norteast|~~Durango~~|~~DGO~~|~~Durango~~||~~Chetumal~~|~~CHE~~|~~Quintana Roo~~|
||~~Monterrey~~|~~MTY~~|~~Nuevo Leon~~||~~Villahermosa~~|~~VSA~~|~~Tabasco~~|
||~~Tampico~~|~~TAM~~|~~Tamaulipas~~||~~Merida~~|~~MID~~|~~Yucatan~~|
||~~Fresnillo~~|~~FRE~~|~~Zacatecas~~|Mexico|Mexico City||Federal District and|
||~~Aguascalientes~~|~~AGS~~|~~Aguascalientes~~|City|Metro Area|MX|State of Mexico|
||~~Colima~~|~~COL~~|~~Colima~~|||||
||Leon<br>~~Cortazar~~|LEON<br>~~CTZ~~|Guanajuato|||||
|Center‐<br>north|Guadalajara<br>Tepatitlan|GDL<br>TEP|Jalisco|||||
||~~Morelia~~<br>Jacona|~~MOR~~<br>JAC|Michoacan|||||
||~~Queretaro~~|~~QRO~~|~~Queretaro~~|||||
||San Luis Potosi|SLP|San Luis Potosi|||||

All Mexican states and the Federal District (which roughly corresponds to the Mexico City Metro Area) are represented in the database with at least one city. INEGI groups these cities 7