political economy of domestic corn ethanol production

Since its inception, the domestic corn ethanol industry in the United States has been dependant on federal subsidies and trade restrictions to keep afloat. Although this political support has allowed the industry to grow, there have been a number of negative externalities as a result, namely the growing demand for corn causing significant increases in the prices of many consumer goods. Despite the fact that consumers are facing rising prices in agricultural and energy markets, ethanol still maintains a level of support around the general American populace that is counterintuitive given its economic reality. In this paper, I contend that much of ethanol's support is maintained through the intentional manipulation of the product's public perception on behalf of politicians and industrial superpowers. I will demonstrate this phenomenon through the use of both Stigler's (1971) and Pelzman's (1976) model of iso-majority.