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I've just started a new game, found another empire about 5 years in and got the -costs buff for ships at year 8. In that case it's hard imbalanced and has hardly anything to do with "catching" up.
It's just abusable in this very early situation.
Also with the AI currently spaming (and not properly using) naval capacity I would either remove the factor or link it with fleetpower. I'm usualy Superior or Overwhelming in Fleetpower and Research if I reach the lategame, but still at best equal in Capacity.
Overall a great idea and I really felt the impact on my economy in the last playthrough when I got significantly ahead, cause the ship upkeep really slowed me down.
Wouldn't player empires crush those irrelevant neighbors as soon as they realize that they are stealing their shit?
It also just seems to make it more appealing playing against harder AI, so that you always have a better chance to catch up if you fall behind by being unlucky!
I can't believe I forgot to mention fallen empires. No, fallen/awakened empires are not affected by this at all. Only regular empires are.
Yes they do. And to clarify, negative modifiers do not stack so having a lot of "irrelevant" non-"ally" neighbors (what the heck are you doing?) will not royally screw you over.