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What's a point of building outposts instead of cities? It seems there is no penalty for having a lot of cities, so why waste pioneer on an outpost?

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You can only found cities in certain places on the map. You can build an outpost anywhere, giving you a lot of flexibility because it expands your borders. It allows you to "seize" distant resources (which go to the city nearest to the outpost in question -- you can check which city receives the benefit by clicking on the outpost)

Additionally, you can do some nifty upgrades on outposts, suppressing random monsters within the boarders and speeding up the movement of your units (among other things). Outposts have a specific strategic use in FE. They're not intended to replace cities; when correctly used they complement and bolster your cities.

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Thanks, good points. –  Sergey Grinev Jan 4 '13 at 15:24
    
Also, one of the possible upgrades for an outpost gives +1 growth to the city it's tied to -- and if you build a new city that's closer to the outpost than the original city, the boost gets shifted to the new city. So that's a good way to jumpstart growth in a new city as well as a way to claim territory/resources before your rivals get to them. –  Shadur Mar 29 '13 at 21:58
    
It look like there is minimum 5 tiles between cities. So you cant build closer. –  kusoksna Jun 22 '13 at 19:55

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