Can we increase dynamics?

There are any number of hardware or software expanders available. The software ones are typically far more flexible. However, an expander can never truly undue the compression/limiting applied to modern recordings. You will be able to gain a few dBs in dynamic range, but it's unlikely that it will sound any more natural than before processing.

Onhwy61, Ngjockey also mentioned that compression is pretty complex. It explains why expanders are not that popular. TV concerts are the worst - so overcompressed that it becomes a joke. Perhaps it is intended for TV set with the smallest speaker. Even less than perfect decompression would be good but it would have to be SPidif-in SPdif-out (I use Toslink to DAC).

What type of files are you trying to improve the dynamics of? If you are dealing with "lossy" files such as MP3 what you may want to do is some form of "compressed music enhancer" to help replace the music info that was thrown out during encoding, not just increase the dynamics (although I will admit that most new pop recordings have next to no dynamic range).... BTW you do not need to worry about a CD's 96 db dynamic range because in real life a listening environment has around 70 db between the noise "floor" of your room and max volume level that most audio systems can produce.

What type of files are you trying to improve the dynamics of? If you are dealing with "lossy" files such as MP3 what you may want to do is some form of "compressed music enhancer" to help replace the music info that was thrown out during encoding, not just increase the dynamics (although I will admit that most new pop recordings have next to no dynamic range).... BTW you do not need to worry about a CD's 96 db dynamic range because in real life a listening environment has around 70 db between the noise "floor" of your room and max volume level that most audio systems can produce.

Although this is not exactly a solution to the intentionally compressed dynamics problem, the space age/ new age products from Machina Dynamica do create a subjectively greater dynamic range (among multiple audible improvements) in good recordings without seeming to tax the capabilities of an amplifier.
I simply mention that this alternative audio medicine is available with results clearly audible to anyone who has implemented these inscrutable tweaks.
I am not affiliated with Machina Dynamica, but always try to promote interest in products I have used which enhance musical enjoyment. In this case the enjoyment is easy even though any "explanation" is not.