DigitalCommons@Linfield

Economies of Scale within State Prisons

Jereld R. Nicholson Library

This paper analyzes the cost of state prisons as a function of state prison populations across U.S. states. Historically and intuitively, a given state's prison expenditures have risen as more inmates enter the prison system. Through panel regression analysis, a detailed understanding is obtained of how state prisons experience economies of scale as inmate populations rise over time. Our model consists of a single function. The equation is quadratic in nature and uses a cost function to see if there are economies of scale within the state prison systems. Our results indicate that as prison populations increase over time, the cost per-prisoner decreases at a decreasing rate. We find that state prison systems are experiencing economies of scale.