In this study, scale elasticity and optimal size of the Swedish sawmill industry is investigated. An input distance function is used to compute scale elasticity. The result of the study shows that the average scale elasticity is above 1, indicating existence of economies of scale in the industry. By comparing the size of the average input - output vectors with the inefficiency adjusted input vector and the output vector for scale efficient units, we could see that, in general, there are gains to be made by expansion. However, some units may gain from becoming smaller.