<p>Why was Chile able to reform Santiago’s public bus transportation system, while Costa Rica’s Greater Metropolitan Area (GAM) still has not been able to do it? Relying on historical analysis and process tracing, this paper unpacks the dynamics between the instrumental and structural power enjoyed by bus operators and state capacity in permitting or inhibiting bus reforms. In the GAM, the growth of bus operators’ political and economic power went hand-in-hand with the weakening of state capacity, leading to a case of regulatory capture and the failure to adopt a bus reform, despite laws, public policies, and a pilot attempt. In Santiago, in spite of opposition, the constitutional power granted to the Executive allowed it to pass a bus reform in 2007 that had large societal, political, and economic impacts. Although challenges remain, the bus system gradually developed an institutional bureaucracy, constant negotiations with bus operators, and increased citizen participation. This paper contributes by shedding light on business power and bringing political economy perspectives to transportation research, historically approached as apolitical. Its theoretical framework highlights the importance of analyzing the interactions between business power and state capacity, as well as understanding how state autonomy and state embeddedness shape state capacity.</p>