But then the problem isn't solved. If you agree that rails covering every tile is a problem (and I don't know if you do), then leaving the production boost in place will mean that it is always better to lay down the railroad spaghetti. Unless the upkeep is extremely high, but that just creates its own problem.
However, I think that your suggestion here:
Why not keep the upkeep, remove infinite movment, and remove the production bonus, then give every city that is connected to your civ via rail an X percent production and comemrce increase (raw materials move faster for production, finished goods move faster for commerce), and a Y percent production boost for every city that is connected to another Civ via rail?

Very good solution.
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I'd like to see an "industry" or "settlement" improvement that comes with industrialization and can be created like an outpost or airfield - it eats a worker. It gives a big shield and trade bonus but cuts all food production. This would also require the ability to ship food between cities.
Reasonably good idea- but then we have to worry about the land becoming choked with these- unless they contribute significantly to pollution in their parent city and can only be built within city squares or upon railroads.
) is fine. It's pollution from industrialization and high pop that is pointless.
I had very little time when I updated with you two's ideas last time you see.
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