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A distributed control approach based on multiagent negotiation is presented, wherein stops and buses act as agents that communicate in real-time to achieve dynamic coordination of bus dispatching at various stops. The negotiation between a Bus Agent and a Stop Agent is conducted based on marginal cost calculations. We present optimality conditions for the formulated problem, using a negotiation algorithm, which we derive, to coordinate bus holding at various stops. A comparison between the negotiation algorithm and other simple bus control strategies such as on-schedule and even-headway strategies made through simulations verifies the robustness and efficiency of our negotiation strategy to different transit environments, involving both stationary passenger arrivals as well as a variety of nonstationary passenger arrivals.