On many campuses, a beginning faculty member cannot expect to be promoted to a tenure position unless he or she brings research money into the campus coffers.
Once 6 semester hours of teaching becomes the norm, an individual college that tried to economize by having its faculty teach 9 or 12 semester hours could run into trouble with the American Association of University Professors and the accrediting agencies.
The University of Colorado law school had its accreditation by the American Bar Association put in jeopardy simply because they did not spend enough money on books for their law library -- even though their students passed the bar exam on the first try at a higher rate than the law students at Harvard and Yale.
The criteria used by most accrediting agencies are based on inputs -- essentially spending -- rather than results for students.
Competition among academic institutions therefore seldom takes the form of lowering their costs of operation, in order to lower tuition. The incentives are all the other way.
Competition often takes the form of offering more upscale amenities -- posh lounges, bowling alleys, wi-fi, finer dorms.
None of this means better education. But, so long as the customers keep buying it -- with government help -- the colleges will keep selling it.