LucidSW - 1:50 pm on Mar 1, 2012 (gmt 0)
I've responded to that other thread and touching briefly on the part you quote here. Basically, the OP in my opinion is out in left field. It's not understanding how Adwords works in my opinion. For some reason, lots of people think that it's Google setting the prices. In fact, they have nothing to do with it, it's all the advertisers.
Now, I don't see how changes in the algo would increase the number of advertisers. These two concepts are not related at how.
As I manage a dozen or so client accounts, I can tell you that in general, the costs are going down. It's because of my management efforts, not because there's more or less competitors or there was an update to Panda which I don't pay any attention to. I can say the same for Bing as a few of them advertise there as well and costs are down there too. Their costs are going down because of doing things better.