But first, the supply isn’t as bounded as it appears—college tuitions have been going up in state schools and schools which expanded, and their costs have also risen. And many of those state schools are growing, and are relatively prestigious. Notice that UCLA and UC Berkeley are each top 25, with 30k students each, but out of state tuition is still >$40k. And there is competition both within and between those schools—they could spend the money on research, which the professors want money for, or give the staff raises instead of wasting the money on class sizes. So there is something left to explain—why are they wasting money in this particular way, instead of wasting it on things the people putatively in charge of the schools want?
But first, the supply isn’t as bounded as it appears—college tuitions have been going up in state schools and schools which expanded, and their costs have also risen. And many of those state schools are growing, and are relatively prestigious. Notice that UCLA and UC Berkeley are each top 25, with 30k students each, but out of state tuition is still >$40k. And there is competition both within and between those schools—they could spend the money on research, which the professors want money for, or give the staff raises instead of wasting the money on class sizes. So there is something left to explain—why are they wasting money in this particular way, instead of wasting it on things the people putatively in charge of the schools want?