Merit money has a lot to do with supply and demand, but the demand for LACs seems to be disproportionately concentrated on East Coasters (or at least they tend to be more inelastic consumers). Thus you consistently see Midwestern LACs of the same caliber offer more merit money than East Coast LACs.
For example, Colgate doesn’t offer merit money. Oberlin and Grinnell do. I believe all of Bard’s merit scholarships all are need-based now as well. Is someone really going to make the argument that Colgate and Bard are that much better than Oberlin or Grinnell? Certainly, by alumni achievements, the opposite is the case.