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From the WSJ article "Media Moguls and Creative Destruction: Competition Works to the Benefit of Consumers, Not Producers":

http://online.wsj.com/article/SB10001424052748704429304574467100596288512.html?mod=djemEditorialPage

The consumer, not the producer, is the beneficiary of greater competition.


From the NBER paper "Schumpeterian Profits in the American Economy: Theory and Measurement":

http://www.nber.org/papers/w10433

The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits and then estimate the value of these profits for the non-farm business economy.

We conclude that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers. For the entire postwar period and for the nonfarm business sector, innovators are able to capture about 2.2% of the total surplus from innovation.

MP: It almost seems unfair that consumers engage in such blatant exploitation of producers and innovators, doesn't it? They do all of the entrepreneurial, innovative work, and we get all of the benefit in the form of lower prices, improved products and a higher standard of living. And then after we exploit the producers and innovators as consumers, we turn around and tax them on their minuscule profits with progressive income tax rates.... If only consumer and taxpayer greed wasn't so rampant.....

My comment:

It depends on the industry or firm. Some industries or firms have rising prices, while others have declining prices. Let's be real. At Microsoft, for example, over 5,000 employees became millionaires. Four became billionaires, amassing a net worth of over $100 billion. Investors made tens or hundreds of billions of dollars on the stock's appreciation and dividends. Guess where all the revenue came from? Yes, consumers. I'm sure management minimized consumer surplus and maximized producer surplus, e.g. using the summation of individual utility functions through the price elasticity of demand, until MR = MC. So, it seems, the big winners at a firm like Microsoft (and many other firms, including older firms, e.g. Gillette, Coca Cola, Boeing, GE, Walmart, Caterpillar, IBM, Johnson & Johnson, 3M, etc.) are the capitalists, entreprenuers, managers, innovators, and employees. Of course, firms that eventually fail may benefit consumers at the expense of investors and producers.