1. A method of compensating for the effect of flare due to stray radiation in use of a projection system of lithographic apparatus to project a radiation beam patterned by a patterning device to produce a pattern image in an image plane, the method comprising: establishing a power spectral density (PSD) indicative of a spatial frequency of the stray radiation produced by the projection system; determining, from the PSD, a modulation transfer function (MTF) relating the PSD to the pattern applied by the patterning device based at least in part on an effect of flare on the pattern image; using the MTF to determine the effect of flare on a critical dimension (CD) of the pattern image; establishing a relationship between a change in the CD of the pattern image and a change in the CD of the pattern; and designing the patterning device in such a way as to at least partially offset the effect of flare on the CD of the pattern image.