Arcs
Do damaged ships or buildings work worse than fresh ones?
The rulebook states this directly.
- Arcs rulebook · Rulebook · Damage & Control
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Only in a few ways. Damaged ships can still move and attack, and damaged cities and starports tax and build normally. Damage matters because the piece is destroyed if hit again, and because damaged ships don't count toward control or intercept. In the campaign, damaged pieces are destroyed at each intermission.