STAY IN THE SAME MODEL. If you're going to argue that universities engage in first-degree price-discrimination to bring in more revenues, and in rationing by queue rather than by price so as to game a "selectivity" ranking, argue consistently.

Here's Richard Vedder using a Veblen effect argument to make sense of some journalists looking at college tuitions.

Jonathan Glater and Alan Finder suggest in today’s (and tomorrow's) New York Times that the tuition explosion may partly be a consequence of a snob effect in higher education: higher tuition charges are perceived to mean higher quality, and with higher quality comes greater numbers of applications. The authors give examples (e.g., Ursinus College in Pennsylvania), that seemingly fit that description.

But he goes on to note that the Veblen effect is irrelevant.

Two factors might help explain the results reported by the Times. First, massive amounts of third party payments, including institutional aid financed by the universities themselves by charging the very affluent through the nose, has reduced the sensitivity of customers to price. Usually, we think that means customers go from being highly sensitive (elastic demand) to becoming insensitive (inelastic demand), but it might even go further --customers become "snobs", wanting to buy "the best" and equating price with quality.

A second factor is that elite colleges are social networks, sort of academic country clubs, and that jobs often come from contacts developed at the university. The more expensive the school, the more elite the student body is likely to be, the more "pull" their parents have, and the greater the probability that graduates will get good jobs through university-developed social connections. Universities that jack up their sticker prices a lot can sock it to the rich legacy candidates for admission who have indifferent test scores, without overtly accepting bribes (which, however, if enough money is on the table, they will do via "development admits", as Dan Golden has so vividly shown us).

The irony in all of this is that perceptions about quality may in fact be way off. It is
interesting that the very best schools as perceived by the public -- the Princeton’s and Harvard’s --charge little or no more than the merely "pretty good" schools like, say, Notre Dame, George Washington University or the University of Southern California. They (the top schools) use a relatively low price (relative to demand conditions) to turn down a huge proportion of applicants, allowing them to cherry pick amongst the rest, taking a majority of students on merit considerations and the rest for other reasons, including their ability to increase already obscenely large endowments via tax deductible gifts.

That last sentence, however, suggests that tuitions at the top schools are inefficiently low, not "jacked up."