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Consequently, what does a bigger exhaust pipe do?
The optimal exhaust size is a function of exhaust volume. The greater the exhaust volume, the greater the optimal exhaust size. Exhaust volume increases with engine rpm and fuel delivery. So ideally you'd have a variable sized exhaust pipe that increases in size as rpm and fuel injection quantity increases.
Keeping this in consideration, do bigger exhaust pipes make it louder?
The diameter of the pipe does not amplify, or dampen sound waves. If you run a straight pipe back from the engine its going to carry the same noise level under a 3" pipe as it would a 4" pipe, it won't get louder.
Proper exhaust-pipe size is a function of both engine output and displacement. Proper exhaust-pipe size is a function of both engine output and displacement. The higher the engine's output, the larger the pipes should be. Likewise, larger engine displacements call for bigger pipes.