Induced (and latent) demand still holds. So if someone is enticed out of a car by this, they'll likely be replaced by another driver.

And in the case of enticing walkers and bikers into transit, nothing is really gained, and it might actually have a negative public health effect.

If you want to reduce car traffic, restricting it is the way to go—price signals on driving and parking work well, as do restrictions on where you can drive and park.

And to get people to use transit, it has to be efficient—not stuck in car traffic, frequent enough, reliable and reasonably direct. And of course, pricing is important as well.

So correct policy will vary by location and situation. E.g. if transit is already jam-packed, reducing the price will be the wrong way to budget; capacity increases should be the top priority. But if the other metrics are good but ridership kind of lacking, dropping the price should improve the ridership. It ain't exactly rocket science, but there's also no silver bullet.