  We report on the measurement of the two-point correlation function and the
pairwise peculiar velocity of galaxies in the IRAS PSCz survey. The real space
two-point correlation function can be fitted to a power law $\xi(r) =
(r_0/r)^{\gamma}$ with $\gamma=1.69$ and $r_0=3.70 \mpc$. The pairwise peculiar
velocity dispersion $\sigma_{12}(r_p)$ is close to $400 \kms$ at $r_p=3\mpc$
and decreases to about $150 \kms$ at $r_p \approx 0.2 \mpc$. These values are
significantly lower than those obtained from the Las Campanas Redshift Survey,
but agree very well with the results of blue galaxies reported by the SDSS team
later on. We have constructed mock samples from N-body simulations with a
cluster-weighted bias and from the theoretically constructed GIF catalog. We
find that the two-point correlation function of the mock galaxies can be
brought into agreemnt with the observed result, but the model does not reduce
the velocity dispersions of galaxies to the level measured in the PSCz data.
Thus we conclude that the peculiar velocity dispersions of the PSCz galaxies
require a biasing model which substantially reduces the peculiar velocity
dispersion on small scales relative to their spatial clustering. The results
imply that either the cosmogony model needs to be revised or the velocity bias
is important for the velocity dispersion of the IRAS galaxies.
