Diminishing returns =/ infrastructure cost. If you have an undeveloped second city in Civ IV, you will have less money than if you only had a single city. This makes it a disincentive rather than a diminishing incentive.
Well, rather than trying any of these AI-warping solutions you could just do what Civilization IV did - include a slowly rising infrastructure cost for each additional colony you have, while also increasing the number of economy increasing upgrades possible for colonies. Therefore, while a modest colony rush can be helpful, more colonies past a certain point will result in a net drain on your economy, leaving you behind on research. A smaller, more focussed empire with better tech will then co
