Free listing encourages people to list too many items at unrealistic starting prices. This populates the sales with overpriced goods. When they fail to sell, the sellers often re-list at the same starting price and hence perpetuate the problem.
I think a modest listing price would make people think about the likelihood of achieving a sale, and so they would set a lower starting price and make the goods more likely to sell.
Another way would be to charge a listing price for goods but refund it if the goods sell after the first listing. Unsold goods could be re-listed on the same basis if the starting price was lowered.