bcaiko
Emperor
Science is harder in a large empire because there is more bureaucracy above you, more layer of rules to wade through before you publish... on the other hand, in a small empire, you can always move one city over and publish your ideas there.
And any new technology discovery must be standardized across the empire to truly be useful... that 5% extra tech cost is going into biologists doing environmental action reports and engineers devising manufacturing standards for each of the 50 states.
Not to mention in order to educate the citizens on how to use the technology (or just the people who need it) over a wide-spread area is going to take more resources. Your teachers/scientists/whatever are going to be less concentrated, costing you some science capacity. That's the way I see this penalty, flavor wise.