One of the important policy issues in developing countries, as well as in industrialized countries, has been concerned with trade policies, namely, protection versus trade liberalization. The effects of protection via tariffs or subsidies have long been viewed in much the same way as tax incidence, in which policymakers' efforts to protect one sector of the economy could result in harming another sector. Following this view, the two-sector studies of protection in the trade literature were extended by R. Dornbush and L. A. Sjaastad to a three-sector framework by the introduction of nontraded (home) goods.' This sectoral approach is called true protection analysis and focuses on the incidence of protection.2 The purpose of this article is to obtain an economy-wide measure of the incidence of protection, called w, in a model economy, Korea. This parameter measures the extent to which the protection of importcompeting activities is shifted onto the producers of exportables. It represents the effect of protection in the import sector on the price of home goods relative to that of exportables. Once we get an estimate of W, we can infer how much burden will fall on the export sector because of the import protection. The empirical results yield an implication to the Korean trade policies, supporting the view that even though the Korean government had comprehensive and active commercial policies, it has adopted a policy package aiming toward free trade in the second-best sense: that is, the government intervenes in trade by giving subsidies to both the import and export sectors. Specifically, the Korean export sector was compensated for any harmful effects of the import-protective policy by direct and informal export incentives that the government provided. The article is organized as follows. In Section II, I give a brief history of Korean trade policies. In Section III, before carrying out the empirical analysis, I first compare the measures of commercial