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In general no. Rather its about finding a balance where the increased output balances with the penalty.
It basically just slow you down a lot (sometimes fatally) if you expand to quickly without building stuff up.
That said, there are effective builds that can keep the empire size very small, especially with the current virtual meta.
Yes, with the focus being trying to find a work'able balance between output and the penalty from expansion.
A couple of things also reduce the "empire size effect" specifically.
For example the Destiny Traits:
Master Bureaucrat gives -5%
Grey Eminence even gives -10%
And IIRC these are directly additive or cumulative with your current numbers. So if you have let's say 50% increased tech costs from empire size with a Virtual Machine empire, having 2x Grey Eminence should reduce this effect to only 30%.
One thing to consider, exceeding naval capacity doesn't increase your Titan limit.
So as long as you can afford it, exceeding the starbase cap is always more effective (assuming you use titans in each fleet, and you are below the limit).
Even weak things like Docile trait became amazing and worth much more then Intelligent when you're over 1k empire spawl.
P.S. Yes, when you're over 1k+ Spawl - even Domination & Harmony traditions became pretty much OP and worth it purely for empire size from pops reduction.
They directly reduce the increased numbers for tech and traditions you see as result from empire size. This is the "Empire Size Effect"
It is listed in the tooltips, and it works,
PS - i already gave the example above. If you play Virtual, you may have something like +50% tech costs you can't really lower anymore by EMPIRE SIZE REDUCTION.
But you can go from +50% to +30% by stacking the EMPIRE SIZE EFFECT twice with -10% each.
If you're playing Virtual then you have 100% empire size from pops reduction and don't need that garbage :)
It will not be +30% as "empire size effect reduction" is multiplicative.
That's a clever way to get more titans, I never thought of it like that. I LOVE Titans, especially for their auras (or better: aurae).
But Titan limit is based on naval capacity (i.e., 1/empire, +1 per 200 n.c.). A station offers a max of +24 n.c. (6 anchorages with a naval logistics office). So I'd need 10 full stations dedicated only to n.c. to get one more titan. At +25% upkeep penalty for all starbases per station above starbase capacity, it seems pretty expensive. Late game I usually have a dyson sphere or two running, and I own many more systems (increasing starbase capacity) so I could manage it, but not until then.