It is of great importance to analyze the competitiveness of Korea's agricultural products at international markets in that such an analysis provides us with the knowledge on where our agricultural products are and how strong the competition is in exporting markets. The analysis also has a significant implication on exporting-related policies of the government and countermeasure of domestic producers for import. One of the direct methods to analyze the competitiveness is to measure it in terms of "differentiation." Differentiation is a kind of terms used to imply how different a product is from the substitutes with respect to price, quality, production cost, fame, certification, etc. Competitiveness of a product is determined not by a single factor, such as price, or production costs, but by consumer's preferences that the all factors together are revealed. For example, beef produced from Korea-origined variety, Hanwoo, doesn't seem to have a competitive edge judged from price and production costs but it has kept being competitive in domestic beef markets. The example of Hanwoo beef shows that the main factors to determine the competitiveness of a product at market is the degree of differentiation that reflects the consumers' preferences. Differentiation could be considered a process that makes a product more heterogeneous to its substitutes. In general, the demand of highly differentiated products is hardly affected by the change in price of substitutes. From a point of competitive view, the more different the higher competitive. Thus, the degree of substitution can be used as one of the indices of competitiveness. The way of assessing competitiveness of a product can be also expanded to the national level. Feenstra suggested a way of measuring substitution elasticities through CES utility function. The elasticities estimated can be interpreted to indicate the competitiveness of a country at world market. Estimated elasticities of substitution of Korea are much larger than those of other countries, which says that agricultural products of Korea are even less competitive at international markets. The US's elasticity of substitution was smallest among the estimates, so the US products have the strongest competitiveness at exporting market.