Appendix
Calculating \(I^*\) for the Basic Model with \(c > 0\)
At an equilibrium,
$$\begin{aligned} \begin{aligned} -\beta I^*S^*-cS^*+w(m-S^*-I^*)&=0 \\ \beta I^*S^* +cS^*-rI^*&=0.\\ \end{aligned} \end{aligned}$$
(28)
From the second line, we have
$$\begin{aligned} S^*=\frac{rI^*}{\beta I^*+c}. \end{aligned}$$
(29)
Substituting (29) into the first line of (28) and simplifying give a quadratic equation:
$$\begin{aligned} \beta (w+r)\left( I^*\right) ^{2}-(\beta wm-rw-c(w+r))I^*-wcm=0. \end{aligned}$$
(30)
The only solution of (30) with \(I^* \ge 0\) is:
$$\begin{aligned} I^{*}=\frac{1}{2}\left( \left[ \frac{wm}{(w+r)}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right] + \sqrt{\left( \frac{wm}{(w+r)}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right) ^{2}+\frac{4wcm}{\beta (w+r)}}\right) . \end{aligned}$$
Proof of Inequality (22)
For \(r_1=\frac{w(\beta m-c)}{w+c}\), we have \(\frac{wm}{w+r_1}-\frac{r_1w}{\beta (w+r_1)}-\frac{c}{\beta } = 0\).
Recall that
$$\begin{aligned} I^*(r) =0.5\left( \frac{wm}{w+r}-\frac{r_1w}{\beta (w+r)}-\frac{c}{\beta } +\sqrt{\left( \frac{wm}{w+r}-\frac{r_1w}{\beta (w+r)}-\frac{c}{\beta }\right) ^2+\frac{4wcm}{\beta (w+r)}}\right) . \end{aligned}$$
Let \(T(r)=\frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\) and \(P(r)=\frac{wcm}{\beta (w+r)}\). Then,
$$\begin{aligned} I^*(r) = 0.5T(r)+0.5\sqrt{(T(r))^2+4P(r)}. \end{aligned}$$
(31)
Now,
$$\begin{aligned} I^*(r_1)=0.5\left( 0\right) +0.5\sqrt{\left( 0\right) ^2+\frac{4wcm}{\beta (w+r_1)}}=\frac{1}{2}\left( \sqrt{\frac{4wcm}{\beta (w+r_1)}}\right) =\sqrt{\frac{wcm}{\beta (w+r_1)}}. \end{aligned}$$
(32)
We have
$$\begin{aligned} T^{'}(r) =-\frac{w(\beta m+w)}{\beta (w+r)^2} \quad \text{ and } \quad P^{'}(r) =\frac{-wcm}{\beta (w+r)^2}. \end{aligned}$$
From (31), we obtain
$$\begin{aligned} \left( I^*\right) '(r)=0.5T^{'}(r)+0.5\frac{T(r)T^{'}(r)+2P^{'}(r)}{\sqrt{T^2(r)+4P(r)}}, \end{aligned}$$
so that
$$\begin{aligned} \begin{aligned} \left( I^*\right) '(r_1)&= -\frac{wm}{2(w+r_1)^2}-\frac{w^2}{2\beta (w+r_1)^2}-\frac{wcm}{2\beta (w+r_1)^2\sqrt{\frac{wcm}{\beta (w+r_1)}}}\\ r_1\left( I^*\right) '(r_1)&=-\frac{wmr_1}{2(w+r_1)^2}-\frac{w^2r_1}{2\beta (w+r_1)^2}-\frac{wcmr_1}{2\beta (w+r_1)^2\sqrt{\frac{wcm}{\beta (w+r_1)}}}.\\ \end{aligned} \end{aligned}$$
Therefore, in view of (32),
$$\begin{aligned} \begin{aligned} C^{'}(r_1)&=r_1\left( I^*\right) '(r_1)+I^*(r_1)\\&=-\frac{wmr_1}{2(w+r_1)^2}-\frac{w^2r_1}{2\beta (w+r_1)^2}-\frac{wcmr_1}{2\beta (w+r_1)^2\sqrt{\frac{wcm}{\beta (w+r_1)}}}+\sqrt{\frac{wcm}{\beta (w+r_1)}}\\&=\frac{wm}{(w+r_1)^2\sqrt{\frac{wcm}{\beta (w+r_1)}}}\left( \frac{cw}{\beta }-\left[ \sqrt{\frac{wcm}{\beta (w+r_1)}}-\frac{c}{\beta }\right] \frac{r_1}{2}\right) -\frac{w^2r_1}{2\beta (w+r_1)^2}.\\ \end{aligned} \end{aligned}$$
Replace \(r_1\) by \(\frac{w(\beta m-c)}{w+c}\) and let
$$\begin{aligned} A=\sqrt{\frac{wcm}{\beta (w+r_1)}}-\frac{c}{\beta }=\sqrt{\frac{cm(w+c)}{\beta (w+\beta m)}}-\frac{c}{\beta }>0. \end{aligned}$$
Notice that for positive \(\beta , c, m, w\) the following inequalities are all equivalent:
$$\begin{aligned} \begin{aligned} \frac{cm(w+c)}{\beta (w+\beta m)}&>\frac{c^2}{\beta ^2}\\ \frac{m(w+c)}{w+\beta m}&>\frac{c}{\beta }\\ \beta m(w+c) = \beta mw+\beta mc&> cw+\beta mc = c(w+\beta m)\\ \beta mw&> cw\\ m&> \frac{c}{\beta }. \end{aligned} \end{aligned}$$
Thus, \(A > 0\) if, and only if, \(m > \frac{c}{\beta }\).
Also,
$$\begin{aligned} w+r_1=w+\frac{w(\beta m-c)}{w+c}=\frac{w(w+c)+w(\beta m-c)}{w+c}=\frac{w(w+\beta m)}{w+c}. \end{aligned}$$
It follows that
$$\begin{aligned} C^{'}(r_1)&=\frac{m(w+c)^2}{(w+\beta m)^2\sqrt{\frac{cm(w+c)}{\beta (w+\beta m)}}}\left( \frac{c}{\beta }-A \frac{\beta m-c}{2(w+c)}\right) -\frac{w(\beta m-c)(w+c)}{2\beta (w+\beta m)^2}. \end{aligned}$$
Now, it suffices to show that when m is sufficiently large relative to the ratio \(\frac{c}{\beta }\), the inequality
$$\begin{aligned} \frac{c}{\beta }-A \frac{\beta m-c}{2(w+c)}<0 \end{aligned}$$
(33)
holds so that
$$\begin{aligned} C^{'}(r_1)<0. \end{aligned}$$
In order to prove (33), it suffices to find some constant \(B> 0\) such that \(A \ge B\) for all sufficiently large m.
Here, we will show that
$$\begin{aligned} 0 <\sqrt{\frac{c(c+\beta )\left( w+c\right) }{\beta ^{2}\left( w+c+\beta \right) }}-\frac{c}{\beta }\le \sqrt{\frac{cm\left( w+c\right) }{\beta \left( w+\beta m\right) }}-\frac{c}{\beta } \end{aligned}$$
(34)
for all \(m\ge \frac{c}{\beta }+1=\frac{c+\beta }{\beta }\).
For the first inequality in (34), notice that the following are all equivalent for any \(\beta , w, c\ge 0\):
$$\begin{aligned} \begin{aligned} \beta w&> 0\\ \left( c+\beta \right) \left( w+c\right) = cw+c^2+\beta c+ \beta w&> cw+c^2+\beta c = c\left( w+c+\beta \right) \\ \frac{\left( c+\beta \right) \left( w+c\right) }{\left( w+c+\beta \right) }&\ge c\\ \frac{c\left( c+\beta \right) \left( w+c\right) }{\beta ^2\left( w+c+\beta \right) }&\ge \frac{c^2}{\beta ^2}\\ \sqrt{\frac{c\left( c+\beta \right) \left( w+c\right) }{\beta ^2\left( w+c+\beta \right) }}-\frac{c}{\beta }&> 0. \end{aligned} \end{aligned}$$
For the second inequality in (34), assume \(\frac{c}{\beta }+1\le m\). Then,
$$\begin{aligned} \begin{aligned} cw+\beta w&\le \beta wm\\ \left( c+\beta \right) \left( w+\beta m\right) = cw+\beta w+c\beta m+\beta ^2m&\le \beta wm+c\beta m+\beta ^2m = \beta m\left( w+c+\beta \right) \\ \frac{c+\beta }{\beta \left( w+c+\beta \right) }&\le \frac{m}{w+\beta m}\\ \frac{c\left( c+\beta \right) \left( w+c\right) }{\beta ^2 \left( w+c+\beta \right) }&\le \frac{cm\left( w+c\right) }{\beta \left( w+\beta m\right) }\, , \end{aligned} \end{aligned}$$
and the result follows by taking square roots of both sides and subtracting \(\frac{c}{\beta }\).
Proof of Theorem 3.6
Assume \(\gamma =\frac{c}{\beta }\). Then,
$$\begin{aligned} \begin{aligned} I^{*}(r)&=\frac{1}{2}\left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\gamma +\sqrt{\left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\gamma \right) ^{2}+\frac{4\gamma wm}{w+r}}\right) \\&=\frac{1}{2}\left[ \frac{-\frac{4wm}{w+r}}{\left[ \frac{wm}{\gamma (w+r)}-\frac{rw}{c(w+r)}-1-\sqrt{\left( \frac{wm}{\gamma (w+r)}-\frac{rw}{c(w+r)}-1\right) ^{2}+\frac{4wm}{\gamma (w+r)}}\right] }\right] \\&=\frac{2wm}{\frac{-wm}{\gamma }+\frac{rw}{c}+w+r+\sqrt{\left( \frac{-wm}{\gamma }+\frac{rw}{c}+w+r\right) ^{2}+\frac{4wm(w+r)}{\gamma }}}. \end{aligned} \end{aligned}$$
(35)
We show that for \(\gamma > m\) and any \(r_2 > r_1 \ge 0\):
$$\begin{aligned} C(r_2)-C(r_1) =r_2I^{*}(r_2)-r_1I^{*}(r_1) \ge 0. \end{aligned}$$
(36)
By substituting the last line of (35) into the right-hand side of (36), canceling the positive factor 2mw and cross multiplying with the positive denominators, we see that it suffices to show
$$\begin{aligned} \begin{aligned}&r_2\left[ \frac{-wm}{\gamma }+\frac{r_1w}{c}+w+r_1+\sqrt{\left( \frac{-wm}{\gamma }+\frac{r_1w}{c}+w+r_1\right) ^{2}+\frac{4wm(w+r_1)}{\gamma }}\right] \\&\quad \ge r_1\left[ \frac{-wm}{\gamma }+\frac{r_2w}{c}+w+r_2+\sqrt{\left( \frac{-wm}{\gamma }+\frac{r_2w}{c}+w+r_2\right) ^{2}+\frac{4wm(w+r_2)}{\gamma }}\right] \end{aligned} \end{aligned}$$
Canceling some common terms gives
$$\begin{aligned} \begin{aligned}&r_2\left[ \frac{-wm}{\gamma }+w+\sqrt{\left( \frac{-wm}{\gamma }+\frac{r_1w}{c}+w+r_1\right) ^{2}+\frac{4wm(w+r_1)}{\gamma }}\right] \\&\quad \ge r_1\left[ \frac{-wm}{\gamma }+w+\sqrt{\left( \frac{-wm}{\gamma }+\frac{r_2w}{c}+w+r_2\right) ^{2}+\frac{4wm(w+r_2)}{\gamma }}\right] . \end{aligned} \end{aligned}$$
After rearranging terms, we obtain
$$\begin{aligned} \begin{aligned}&\left( r_2-r_1\right) \left[ w\left( 1-\frac{m}{\gamma }\right) +\sqrt{\left( \frac{-wmr_2}{\gamma }+\frac{r_1r_2w}{c}+wr_2+r_1r_2\right) ^{2}+\frac{4wmr^2_2(w+r_1)}{\gamma }}\right. \\&\quad \left. -\sqrt{\left( \frac{-wmr_1}{\gamma }+\frac{r_1r_2w}{c}+wr_1+r_1r_2\right) ^{2}+\frac{4wmr^2_1(w+r_2)}{\gamma }}\right] \ge 0. \end{aligned} \end{aligned}$$
If \(\gamma > m\), the first term in the square brackets is nonnegative. Next, we will show that
$$\begin{aligned} \begin{aligned}&\sqrt{\left( \frac{-wmr_2}{\gamma }+\frac{r_1r_2w}{c}+wr_2+r_1r_2\right) ^{2}+\frac{4wmr^2_2(w+r_1)}{\gamma }}\\&\quad \ge \sqrt{\left( \frac{-wmr_1}{\gamma }+\frac{r_1r_2w}{c}+wr_1+r_1r_2\right) ^{2}+\frac{4wmr^2_1(w+r_2)}{\gamma }}. \end{aligned} \end{aligned}$$
(37)
Consider the following expression, which is always positive for \(r_2>r_1\):
$$\begin{aligned} \begin{aligned}&\left[ (r_2+r_1)\left( w-\frac{wm}{\gamma }\right) +\frac{2r_1r_2w}{c}+2r_1r_2\right] \left[ \left( r_2-r_1\right) \left( w-\frac{wm}{\gamma }\right) \right] \\&\quad +\frac{4w^2m}{\gamma }\left( r^2_2-r^2_1\right) +\frac{4wmr_1r_2}{\gamma }\left( r_2-r_1\right) \ge 0. \end{aligned} \end{aligned}$$
(38)
By expanding the products inside each of the main factors in the first line of (38) and rearranging terms, we obtain:
$$\begin{aligned} \begin{aligned}&\left( \frac{-wmr_2}{\gamma }+\frac{r_1r_2w}{c}+wr_2+r_1r_2-\frac{wmr_1}{\gamma }+\frac{r_1r_2w}{c}+wr_1+r_1r_2\right) \\&\quad \left( \frac{-wmr_2}{\gamma }+\frac{r_1r_2w}{c}+wr_2+r_1r_2+\frac{wmr_1}{\gamma }-\frac{r_1r_2w}{c}-wr_1-r_1r_2\right) \\&\quad +\frac{4w^2mr^2_2}{\gamma }+\frac{4wmr_1r^2_2}{\gamma }-\frac{4w^2mr^2_1}{\gamma }-\frac{4wmr^2_1r_2}{\gamma }\ge 0. \end{aligned} \end{aligned}$$
(39)
By rewriting the first two lines of (39) as a difference of two squares and factoring out some terms in the third, we obtain
$$\begin{aligned} \begin{aligned}&\left( \frac{-wmr_2}{\gamma }+\frac{r_1r_2w}{c}+wr_2+r_1r_2\right) ^2-\left( \frac{-wmr_1}{\gamma }+\frac{r_1r_2w}{c}+wr_1+r_1r_2\right) \\&\quad +\frac{4wmr^2_2}{\gamma }\left( w+r_1\right) ^2-\frac{4wmr^2_1}{\gamma }\left( w+r_2\right) \ge 0. \end{aligned} \end{aligned}$$
(40)
Now, (37) follows from (40) by moving the negative terms to the right and taking square roots.
The Cost Function Increases When \(\beta = 0\)
When we set \(\beta = 0\) in the basic model, we obtain a system of linear DEs
$$\begin{aligned} \begin{aligned} \frac{\hbox {d}I}{\hbox {d}t}&=c(m-I-R)-rI\\ \frac{\hbox {d}R}{\hbox {d}t}&=rI-wR.\\ \end{aligned} \end{aligned}$$
At equilibrium,
$$\begin{aligned} \begin{aligned} c(m-I^{*}-R^{*})-rI^{*}&=0\\ rI^{*}-wR^{*}&=0.\\ \end{aligned} \end{aligned}$$
(41)
Substitute \(R^{*}=\frac{rI^{*}}{w}\) into the first line of (41) and solve for \(I^{*}\) to get
$$\begin{aligned} \begin{aligned} I^{*}&=\frac{cwm}{wc+r(w+c)}\\ C(r)&=\frac{rcwm}{wc+r(w+c)}. \end{aligned} \end{aligned}$$
Thus, we can estimate the derivative of the cost function as follows:
$$\begin{aligned} \begin{aligned} \frac{\hbox {d}C}{\hbox {d}r}&=\frac{\left[ wc+r(w+c)\right] cwm-rcwm\left[ w+c\right] }{\left( wc+r(w+c)\right) ^2}\\&=\frac{w^2c^2m+rcw^2m+rc^2wm-rcw^2m-rc^2wm}{\left( wc+r(w+c)\right) ^2}\\&=\frac{w^2c^2m}{\left( wc+r(w+c)\right) ^2}>0.\\ \end{aligned} \end{aligned}$$
Proof of Proposition 3.8(a)
We consider any function of the form
$$\begin{aligned} f(h) = c - h + \sqrt{(c-h)^2 + dh}, \end{aligned}$$
(42)
where \(c, d > 0\) are constants such that
$$\begin{aligned} d > \max \{4c, 0\}. \end{aligned}$$
(43)
The first derivative of f wrt h behaves as follows:
$$\begin{aligned} \begin{aligned} f'(h)&= -1 + \frac{-(c-h) + d/2}{\sqrt{(c-h)^2 + dh}},\\ f'(0)&= -1 + \frac{-c + d/2}{\sqrt{c^2 + 0}} = -1 -\frac{c}{|c|} + \frac{d}{2|c|} > 0,\\ \lim _{h\rightarrow \infty } f'(h)&= \lim _{h\rightarrow \infty } - 1 + \frac{-(c-h) + d/2}{\sqrt{(c-h)^2 + dh}}\\&= \lim _{h\rightarrow \infty } -1 +\frac{h-c}{\sqrt{(c-h)^2 + dh}} +\frac{ d}{2\sqrt{(c-h)^2 + dh}} = 0. \end{aligned} \end{aligned}$$
(44)
Let us calculate the second derivative of f wrt h.
$$\begin{aligned} \begin{aligned} f''(h)&= \frac{\sqrt{(c-h)^2 + dh} - \frac{((c-h) - d/2)^2}{\sqrt{(c-h)^2 + dh}}}{(c-h)^2 + dh} = \frac{(c-h)^2 + dh - ((c-h) - d/2)^2}{((c-h)^2 + dh)\sqrt{(c-h)^2 + dh}}\\&=\frac{(c-h)^2 + dh - (c-h)^2 - d^2/4 - dh + dc}{((c-h)^2 + dh)\sqrt{(c-h)^2 + dh}}\\&= \frac{ - d^2/4 + dc}{((c-h)^2 + dh)\sqrt{(c-h)^2 + dh}} < 0. \end{aligned} \end{aligned}$$
The last inequality follows from (43).
Thus, \(f'(0) > 0\) and \(f'\) decreases throughout \([0, \infty )\). Now, it follows from the last part of (44) that \(f'(h) > 0\) throughout \([0, \infty )\). Proposition 3.8(a) follows by observing that the function \(\frac{I^*(r_i, c_i)}{2\beta _{ii}}\) is of the form (42) with
$$\begin{aligned} \begin{aligned} h&= c_i\\ c&= \frac{\beta _{ii}w_im_i-w_ir_i}{w_i+r_i}\\ d&= \frac{4\beta _{ii}w_im_i}{w_i+r_i}, \end{aligned} \end{aligned}$$
so that (43) holds.
Proof of Proposition 3.8(c)
$$\begin{aligned}&\lim _{r\rightarrow \infty }C(r)= \lim _{r\rightarrow \infty } rI^*(r) \\&\quad = \frac{1}{2}\lim _{r \rightarrow \infty }r\left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }+\sqrt{\left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right) ^{2}+\frac{4wcm}{\beta (w+r)}}\right) \\&\quad =\frac{1}{2}\lim _{r \rightarrow \infty }r\left[ \frac{\left[ \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right] ^2-\left[ \left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right) ^{2}+\frac{4wcm}{\beta (w+r)}\right] }{\left[ \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right] -\sqrt{\left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right) ^{2}+\frac{4wcm}{\beta (w+r)}}}\right] \\&\quad =\frac{1}{2}\lim _{r \rightarrow \infty }\left[ \frac{-\frac{4rwcm}{\beta (w+r)}}{\left[ \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right] -\sqrt{\left( \frac{wm}{w+r}-\frac{rw}{\beta (w+r)}-\frac{c}{\beta }\right) ^{2}+\frac{4wcm}{\beta (w+r)}}}\right] \\&\quad =\frac{1}{2}\left[ \frac{-\frac{4wmc}{\beta }}{-\frac{w}{\beta }-\frac{c}{\beta }-\sqrt{\left( \frac{w}{\beta }+\frac{c}{\beta }\right) ^{2}}}\right] =\frac{1}{2}\left[ \frac{-\frac{4wmc}{\beta }}{-2\frac{(w+c)}{\beta }}\right] =\frac{wcm}{w+c}. \end{aligned}$$