This paper explores the determinants of the costs of prisons. An economic model relates cost to output, input prices, and a number of variables controlling for differences in the type of outputs and inputs for each prison. Data from the federal prison system are used to estimate the model. Our results indicate that a minimum-cost prison would be quite large (1,000 to 1,600 inmates) and that the improvement of some correctional standards (e.g., single-bed cells, more living space) may serve to decrease rather than increase prison operating costs.