Seth has an idea:
Some things are better when they're not free.
If Craigslist charged a dollar for every listing, what would happen?
Money creates a sort of friction. In the digital economy, magical things can happen when there is no friction. You can scale to infinity. On the other hand, sometimes you want friction.
I buy this. I agree that some friction introduced to CL would probably improve the much-maligned user experience significantly and thus its utility.
However, sometimes you don't know the exact nature of the friction you are about to introduce to the system.
CL is extremely liquid because it is free. You introduce cost and all of a sudden, liquidity starts going down. Not that legitimate users would mind the $1/ad cost. But there are other transaction costs that will inevitably enter the picture: who processes these payments? can all users access the payment methods? can most? you get the issue...
I suspect the scale and liquidity of CL is one of those magical things that happened because CL is free.