Thanks.
Right now all I do is run this in the console:
ebook-convert.exe "inputfile.txt" "outputfile.mobi" [+author, title, language]
Ideally, I need a solution that involves just adding some command line options.
I had a quick look at the documentation at
http://manual.calibre-ebook.com/cli/ebook-convert.html
The --remove-paragraph-spacing option seems to do the trick. I don't have my kindle at hand right now, but I think it will look OK. Maybe I will use --remove-paragraph-spacing-indent-size 0 to get rid of indents as well. BTW if I decide I want some spacing, just less than the original, am I out of luck? Because I can't see a command line option to specify paragraph spacing, just to eliminate it.