Can offshoring increase quality? A dynamic model

We propose a dynamic model to study the problem of relocating pro- duction to a foreign country, where production costs are lower. The idea is to investigate the impact of offshoring on the quality of the manufac- tured goods in a simple dynamic model, which is analytically treatable. What we will show is that, under the assumptions of our model, if the trading costs are sufficiently convenient, the quality increases with off- shoring.