Pep Guardiola has no issues selling players to rivals because Manchester City are not a “small club”.
Palmer left City for Stamford Bridge in August having grown frustrated at a lack of game time under Guardiola, a year after Sterling also moved there for a fresh challenge.
Some managers might be uncomfortable with at sales that effectively strengthen clubs in direct competition, but Guardiola insists it has “never ever” bothered him.
The City boss said: “From my point of view, I give my opinion to the club but after that the club has to decide if the transfer is good for both sides and for the player.
“But never ever (has it been an issue). I think that means you are a small club. Big clubs make decisions for the benefit for all three parties: players, both clubs – and agents sometimes. Really, it’s not a problem.
“So if they want to go to Chelsea or (Manchester) United or, I don’t know, Liverpool or whatever, what is the problem? They are happy to be there, the club is happy for the transfer.
“Another player would come and we’d keep going: good spirit, good mood, and try to do it.”
City had high hopes for 21-year-old midfielder Palmer, who came through their youth system.
He was a member of the squad that won the treble last season and started the current campaign strongly with goals in the Community Shield and European Super Cup matches.
It looked like he could get more opportunities following the departure of Riyad Mahrez but he opted to move on regardless, joining Chelsea in a £42.5million deal.
So far he has impressed at the London club and Guardiola accepts his decision to move appears to have paid off.
He said: “They moved from here because they wanted to play and, if they play, the decision made has been good.
“So Raheem, since he left, plays always and Cole, since he left, is playing always. So they took good decisions.
“Cole accepted some process but after one or two years he said, ‘I don’t want to stay here because I’m not going to play’.
“I said, ‘But Riyad is leaving, you have a chance’. He said, ‘I’m not going to play here. I’m going to leave’.
“OK, leave. He got what he wanted. It’s good for him. He’s a huge talent. Otherwise he would not have been here.”