Sometimes at least they do. This is part of a very interesting interview with Bruce Yandle, the guy who gave us the whole concept of Bootleggers and Baptists.
I was working on the White House staff reviewing newly proposed regulations during the end of the Ford administration and the first part of the Carter administration, in a unit of the Council on Wage and Price Stability. My beat was the EPA. I reviewed the copper smelter standards. I would get their big regulatory bundles and review them, and we would make comments in an attempt to try to reduce the cost of accomplishing the goal. EPA had an excellent economic analysis. The last section said when this regulation becomes final, there will never be another copper smelter built in the United States of America. How would you feel if you had a copper smelter?
You’d just been told you will never have any new competition.
This is a stage further than the more usual complaint, that large companies can afford the people to deal with new regulations that small ones cannot. This is about the way in which regulations can completely abolish any possibility of new upstart competition.
It's worth reading the whole thing: the way that the US regulated sulphur emissions from coal is a wonderful example of political lobbying. Western coal is low in sulphur, Eastern coal high. So, to reduce sulphur emissions all that was actually needed was a standard for emissions. Those who wanted to burn the cheaper Eastern coal would have to install a scrubber: those who would pay for the more expensive Western would not.
However, the Eastern miners (and owners) were more politically organised and managed to get the legislation changed to insisting that everyone had to have a scrubber. An entirely non-optimal solution to an admitted problem brought about by the exercise of political power and lobbying. Bismark was right on that law and sausage making thing.