Yes, merit awards are given to attract the students a college most wants. As a general rule, the schools that least need to attract the students they want, give out thee Ed least merit money, budgets kept into account.
There is also enrollment management where a need aware schools might accept 5 students with need at the $10k level rather than one student needing $50k
IMO, the models have become more complex but the principles has been around for a long time.