On any web page, there are two types of outbound links:-
a. Links to other pages on the same site.
b. Links to pages on other sites.
Very roughly speaking, the PR for a page is divided up between all outbound links on the page - whether the link is of type a or b.
If a page had a PR of 5 and had 10 outbound links then, roughly speaking, each link would pass on a PR of (5 * 0.85) / 10 to their linked targets. The factor of 0.85 is known as the dampening factor and avoids any page passing on its entire PR.
This is why it is necessary to have a good linking strategy within a website and maximise the PR the site's own pages pass back and forth between each other. You can't raise the PR of pages on a site above the maximum PR assigned to your best page by Google, but you can maximise the spread of PR through the pages in your site. With a good linking strategy within a site, the effect on PR of the odd outbound link is kept to a minimum.
Of course, the real situation is more complicated than this simple equation shows. Link text and other factors like the position of the link on the page also count. It's thought that links higher on the page probably pass a little bit more PR. It's also thought that links on a page with the word "Links" in the title count for less. Having text close by on a page with the words "Sponsors", "Links" or "Adverts" might also diminish the PR (or link juice) passed on.
If you add a rel="nofollow" tag to a link, the link no longer passes any PR. Google advises people who sell advertising with links to do just this in order to avoid a penalty.
Some webmasters nofollow all outbound links as a matter of course. This is considered a little rude in some quarters - if you think a link is worth having, give the linked page the benefit of some PR.
I guess the main question now is why have any outbound links at all? One reason will be that you believe the links add value to your page - by giving people access to more information. Google buys into this mentality. If you link from your pages to relevant, authority pages, Google is thought to consider that your pages are themselves a more valuable information resource. Google then gives you a bit of extra help in SERPs. For example, if you were a billing software seller, you might link to the UK goverment's advisory pages on invoice payment terms.
by ML
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