Implication for Econometric Analysis and Practice Foremost, in a price level estimation in which a measure of the strictness of the antitrust

A stricter merger control policy increases the expectation of future price competition. In response, firms increase product differentiation to sustain higher prices. Failing to account for such policy-variant prices may lead to overestimation of the increase in consumer surplus due to the stricter merger policy, rendering the policy analysis subject to the Lucas Critique. D 2004 Elsevier B.V. All rights reserved.