We analyze a model economy with many agents, each with a different
productivity level. Agents divide their time between two activities:
producing goods with the production-related knowledge they
already have and interacting with others in search of new, productivityincreasing
ideas. These choices jointly determine the economy’s current
production level and its rate of learning and real growth. We
construct the balanced growth path for this economy. We also study
the allocation chosen by an idealized planner who takes into account
and internalizes the external benefits of search. Finally, we provide three
examples of alternative learning technologies and show that the properties
of equilibrium allocations are quite sensitive to two of these variations.