Last month, I read Randal O'Toole's Cato Policy Analysis on rail versus buses in which he concluded that high-capacity buses are preferable to rail in part because they can share roads and highways with cars and trucks and don't require a lot of new infrastructure. This got me thinking: why don't cities use school buses for mass transit? As capital goods go, they seem to spend a lot of time sitting around, especially during the summer. I can't imagine they would need to charge much and/or need that many riders to cover the marginal cost of commuter rides. If you're asking "would you really want to ride a school bus to work," my answer is "if the price is right and if the trip isn't too long."
So what gives? One of the lessons of economics is that there aren't a lot of dollar bills on the sidewalk. Why wouldn't this work? What are the regulatory roadblocks, if there are any?