Andrew_Lolk - 7:03 pm on Aug 8, 2012 (gmt 0)
If you are not in first position, raising your bid raises your positioning but now you have changed the parameters. The ad below you is probably not the same and therefore the cost will be different. It may go up or down or stay the same.
What you're saying is true except the quote above.
Let's say you're bidding $5 and have a QS of 10 (Ad Rank 50).
The advertiser below you has a QS of 7, but is bidding $6 (Ad Rank 42).
Your CPC is now roughly $5 on the dot, as it is the max you're bidding. You can never spend more, so you can't pay the famous $0.01 more than the advertiser below you.
In this case you could actually see an increase in CPC if you increase your bidding to $6. This would increase your ad rank to 60, and seeing that your maximum CPC bid has increased to $6 and the advertiser below you is bidding $6, then your actual CPC would reach $6 as well.
I hope this made sense. It's a messy subject with a lot of variants. I'm not saying anything is definite or that you would always see the scenario above, but it might be true.