Most people want to pay the lowest price that will deliver the goods. Sometimes, though, you want to be sure you get the very best quality goods. There are a dozens of ways to measure quality. One of the easiest, though most treacherous, is price. For some goods, more people will flock to it if it costs more, even if it costs much more than competitors. This is called the Veblen Effect, after Theory of the Leisure Class author Thorstein Veblen.
College education is worth paying more to get the best. And the best education does cost more than the more mediocre kinds. Some colleges cost more because they spend more to educate.
Some colleges, though, charge more just so other people will think that they are as good as the most expensive. They may even be that good, but don't, for strict cost reasons, actually need to charge that much. Still, the market is a harsh mistress. The New York Times reports today that Ursinus College, for example, raised its prices to keep up with the competition – and as a result, applications went up considerably.
I am happy to report that Centre College still offers "a New England education at Southern prices."