This paper provides an equilibrium framework to evaluate environmental policy in trade-exposed industries with imperfectly competitive supply chains. The empirical setting is the South American agricultural sector, a global agricultural powerhouse with a major environmental impact. On the supply side, I address key margins determining emissions: how much land farmers choose to deforest, which commodity they choose to produce, and the geographic location where deforestation and production take place. On the demand side, I allow for market power along the supply chain: farmers’ access to consumers is intermediated by a monopsonistic agribusiness sector. Given the infeasibility of a first-best carbon tax, I use my framework to evaluate feasible alternatives, such as environmental tariffs on imports from South America. Unless all trading partners regulate their imports, emissions reductions achieved by regulated markets are mostly offset by increased trade flows to non-regulated markets. Apart from being ineffective, unilateral tariffs have regressive distributional effects across space, as farmers in the poorest regions, where supply is most inelastic, disproportionately bear the burden of regulation through lower farm-gate prices. Finally, agribusiness market power exacerbates the ineffectiveness and regressivity of the policy. Thus, policies aimed at correcting a single externality can interact with other market distortions—affecting their performance not only in efficiency terms, but also in how they skew the distribution of the remaining surplus.

This paper shows the endogeneity of amenities plays a crucial role in determining the welfare distribution of a city's residents. We quantify this mechanism by building a dynamic model of residential choice with heterogeneous households, where consumption amenities are the equilibrium outcome of a market for non‐tradables. We estimate our model using Dutch microdata and leveraging variation in Amsterdam's spatial distribution of tourists as a demand shifter, finding significant heterogeneity in residents' preferences over amenities and in the supply responses of amenities to changes in demand composition. This two‐way heterogeneity dictates the degree of horizontal differentiation across neighborhoods, residential sorting, and inequality. Finally, we show the distributional effects of mass tourism depend on this heterogeneity: following rent increases due to growing tourist demand for housing, younger residents—whose amenity preferences are closest to tourists—are compensated by amenities tilting in their favor, while the losses of older residents are amplified.