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One of the issues with duplicate content is that links can be split across several versions of your page, it was my understanding the a 301 redirect is really the only option for retaining some of the link juice, however, looking at some answers here and on other forums it looks like some people believe the canonical tag will have the same effect as a 301 (in the search engines eyes).

Does the canonical tag tell the search engines that the links pointing to duplicate pages should count for the original or does it simply tell them which version of the page you want indexed?

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It just fixes duplicate content issues by telling the search engines which page is the "main page" that they should list in their index. It's not an actual link and thus does not pass PR.

Additional URL properties, like PageRank and related signals, are transferred as well.

Quoted from the link below. I either missed or forgot that part since I read that blog post. Based on that sentence I would say the "main" canonical URL would receive the PR of all of the children URLs that point to it. So if http://www.example.com/page1.html was the main URL and http://www.example.com/page2.html was a canonical URL then a link to http://www.example.com/page2.html would be essentially a link to http://www.example.com/page1.html.

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Well, technically Google treats the canonical page and any pages with it as their canonical URL as the same page. So PR is technically being passed. Though I guess it's more accurate to say that they all share the same PR. See: googlewebmastercentral.blogspot.com/2009/02/… –  Lèse majesté Nov 15 '10 at 4:09
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