This paper examines three aspects of the public library's circulation service: (1) a demand function for the service is estimated; (2) a long-run unit circulation cost curve is developed; and (3) using the economist's notion of "efficiency," a general model for the pricing of the circulation service is presented. The estimated demand function describes how differences in the socioeconomic and demographic characteristics of communities affect the per capita use of the circulation service. The average cost equation shows how operating costs vary with library size and indicates that economies of scale are present in the provision of this service, showing how variations in service quality influence unit cost. The pricing model presents an alternative method of funding library operations. Drawing a general distinction between adult (recreational) and pre-adult (educational) users, it is argued that recreational users should bear their full share of operating costs, while educational users should have their use subsidized. Data tables and diagrams are provided. (Author/JD)