Is anchor text link juice passed in internal links?
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Let's say I have www.bobswidgets.com. If I have "widgets for sale in tuscon arizona' be the anchor text on an internal link on www.bobswidgets.com/page1 which goes to www.bobswidgets.com/page2 - does the value of the anchor text (widgets for sale in tuscon arizona) get passed internally? External links pass the value of the anchor text but do internal links?
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Anchor text is passed regardless if it is internal or external, essentially a link is a link no matter where it points to (a generalization sure, but true nevertheless.) What you need to be careful of is keyword stuffing. If you build all your internal links to widgets for sale in cityname it really is not going to look so good to users or search engines. Keep it civil and don't worry too much about keyword density, just make sure each page is focused on a unique set of keywords, the content is relevant, and the links that point to it from offsite contain some version of the keywords in the anchor text.
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Yep, they sure do. You can find more here which briefly discusses site hierarchy and spreading link juice based on your domain weight. Depending on your domain authority you might want to be more selective on the "widgets" you choose to link to, at least higher up on the page.
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