> If Charles State spends a million dollars trying to attract Bob, Derek U spends a million and a half, and Bob decides to go to Derek U, Charles State has wasted a million dollars. Furthermore, the fancy new aquatics complex at Derek U may have been the deciding factor for Bob but it does nothing to make him better at electrical engineering, his chosen major.
Why do you think it's zero sum? Everything I've read suggests the total number of college students is increasing while school count isn't. Schools are increasing capacity, but not necessarily fast enough. Bob may not matriculate, but many others might because of the aquatic center.
I can't imagine schools are building an aquatic center for one individual who might not even matriculate. I can imagine schools building an aquatic center to increase the overall matriculation rate. If it works, and this example is representative, then what you're describing sounds like a competitive market causing all the producers to make investments to improve their product. (You could argue they shouldn't, that we'd rather they be affordable and not have aquatic centers, but that's a different debate.) If it doesn't work, then it sounds like it was just a bad decision, and possibly one with long-term costs for upkeep. But as far as I can tell, on average these things _are_ working, because colleges are only getting more selective.