regulations can erect barriers to entry (the cost of complying with regulation in many industries are massive, cars for example), meaning that existing players

regulations can erect barriers to entry (the cost of complying with regulation in many industries are massive, cars for example), meaning that existing players can lower their service standards by a set amount (down to the point where a competitor could expect that better service would gain enough of the market to recoup the entry costs). a barrier to entry effectively changes the risk/reward expectation of investors.