The real problem is due to the regulatory environment. Yes those rules are important, but they've also effectively banned new aircraft from being built. There are now generations of engineers that are experienced in making a new aircraft look like a small tweak to an existing one.
That has very little to do with regulation and everything to do with airlines being cheap bastards and not wanting to retrain employees and reconfigure ramps.
It takes a long time to design new planes, and other than the benefits of the larger engines, there’s not much reason to. Airbus benefited from the newer design of the A320 with its longer landing gear and thus was able to just slap the new engines under the wings, whereas Boeing needed to redesign the 737’s engine configuration. But beyond that, Boeing and Airbus already have planes that meet the various market segments or have no reason to try to compete, like how they buy into the regional jet market. No reason to design from the ground up, instead they just improve the same model.