At the beginning of the game (year 1300 start) I just let pirates have my loot, being the cheapest way to deal with them when you are unarmed. Now I can put together a fleet that can beat most pirates, and I've captured a couple of nice ships from them, but the repair costs have created some uncomfortable cash flow problems as I only have five ships and having three of them down for two months really slows me down.
Here's the question, it still seems to be more cost effective to just let them have my loot, however, if I keep doing that, do pirates increase in numbers and strength? Am I doing myself any long term good by dismantling a pirate fleet when I can, in spite of the high short term cost? I wonder if AI pirates have costs to worry about, or if they are entirely randomly generated and keep coming back no matter what you do to them.