856 Journal of Health Politics, Policy and Law 946 THE AMERICAN ECONOMIC REVIEW simply not available. Thus, a wide class of commodities is nonmarket able, and a basic competitive precondition is not satisfied. There is a still more subtle consequence of the introduction of risk- Robinson bearing considerations. When there is uncertainty, information or knowledge becomes a commodity. Like other commodities, it has a cost of production and a cost of transmission, and so it is naturally not spread out over the entire population but concentrated among those who can profit most from it. (These costs may be measured in time or cult to discuss in the rational terms usually employed. The value of information is frequently not known in any meaningful sense to the buyer; if, indeed, he knew enough to measure the value of informa tion, he would know the information itself. But information, in the form of skilled care, is precisely what is being bought from most physi- cians, and, indeed, from most professionals. The elusive character of information as a commodity suggests that it departs considerably from he usual marketability assumptions about commodities, That risk and uncertainty are, in fact, il care hardly needs argument. I will hold that virt features of this industry, in fact, stem from the pi The nonexistence of markets for the bearing of some risks in the first reduces welfare for those who wish to transfer those risks to others for a certain price, as well as for those who would find it proft able to take on the risk at such prices. But it also reduces the desire to render or consume services which have risky consequences; in techni cal language, these commodities are complementary to risk-bearing Conversely, the production and consumption of commodities and serv ices with little risk attached act as substitutes for risk-bearing and are encouraged by market failure there with respect to risk-bearing. Thus the observed commodity pattern will be affected by the nonexistence of m tion of the law of large numbers Since most objects of insu ear that this effect is sufficiently great to create serious y of co (R&D and nat of production. Hence, it is not surprising that a free enterprise economy will ten to underinvest in research; see Nelson [211 and Arrow [41