That’s the point, without the fraudulent clicks you would just move on to some other strategy because the pricing would not be worth it.

Fake clicks give the illusion that ads are working and instead you have to optimize your funnel or whatever else.

But if you're the only one doing it because the competition haven't figured it out, then you win in until they do. You can outbid on each ad.

That’s true. But you probably can’t. At least any more than others. It’s a systemic issue in the ad network ecosystem which you don’t have much control over. If you can figure it out, odds are lots of others can too. People do assess the quality of traffic sources and do check the return on ad spend. It’s that system wide process that keeps the return on ad spend roughly constant.

The point here, for me, is that a microeconomic perspective on this whole question is more salient than a purely technical one.

The ad spend itself is not the issue.

I am fine with spending $10,000 on ads (or whatever amount).

The issue is that when I know $5,000 of it was spent on clicks that had 0% chance to convert. For every fraudulent click I can block/prevent that is one more click that can be made by a real person who may actually make a purchase.

A properly informed market is a more efficient market.

The online ad market is extremely inefficient because it has no idea how much ad spend is even reaching people.

You should have a good idea. How to know if an ad reaches people had been extensively studied for a lot longer than the internet even existed. Newspapers don't have clicks, but you still need to know if you ad works. Even on the internet, a large part of the value of ads are see the ad, buy latter without clicking on the ad. We can track this: do it.