Paying Less for Public Transit Buses

Technological change and heightened global market competition have revolutionized the market for pri- vate vehicles,1 and the real quality-adjusted price of a new vehicle fell by 40 percent between 1995 and 2025.2 However, when it comes to buses—the most heavily used transit mode in the US, which accounted for approximately 3.8 billion unlinked passenger trips in 20243—prices have not followed the same trend.4 This issue is important for several reasons. First, transit is crucial for promoting equity, addressing climate change, creating jobs, and fostering economic development. Second, transit buses play a pivotal role in public transit systems due to their flexibility and cost-effectiveness. Third, transit agencies are fac- ing budget crises in the aftermath of the COVID-19 pandemic due to lower ridership and revenue, and many operate aging bus fleets that require significant investment. Finally, if we aim for more effective and better transit options, reducing the costs associated with bus services is essential