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 h ^ { -1 } { Mpc } .
The pairwise peculiar velocity dispersion \sigma _ { 12 } ( r _ { p } ) is close to 400 { { km s ^ { -1 } } } at r _ { p } = 3 h ^ { -1 } { Mpc } and decreases to about 150 { { km s ^ { -1 } } } at r _ { p } \approx 0.2 h ^ { -1 } { 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 .