Are duplicate page titles fixed by the canonical tag
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Google Web Master Tools is saying that some of my pages have duplicate page titles because of pagination. However, I have implemented the canonical tag on the paginated pages which I thought would keep my site from being penalized for duplicate page titles. Is this correct? Or does canonical tag only relate to duplicate content issues?
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If you followed their instructions for pagination with rel="next" and rel="previous" then you should be fine. A canonical tag should only be used if there are even more variables (i.e. sort by, category filters, etc)
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To expand on Oleg's answer: Canonical really only works when the page content is largely the same as well. It is meant for when the same content can be accessed from different URLs.
In the case of pagination the content will not be the same, so it is really the wrong tool for the job. As Oleg says, the best answer would be to use the pagination markup. However you can also get around the reported duplicate titles by simply appending the page number (for all pages after #1) in the title.
So rather than top pages of "your results" you have "your results", "your results : Page 2", "your results : page 3" etc.
It's a bit of a waste of title tags and also could impact CTR if any of those pages are ranking. However it is a solution to at least be aware of.