I think there is also a PR factor beyond the market economics of the $3 discount. Announcing the free transit alongside the pollution spike will get more people to read about it and consider whether they should make the choice to help with the pollution spike by taking transit.

There is also a bigger difference between free and $3 than between $3 and $6. Free means you don't have to buy a ticket, deal with the app or ticket machine, or have an existing public transit card. The "power of free" is worth considering here.