That depends on what you want the promotion to accomplish.
A free ebook promotion is usually best when your goal is to reach as many new readers as possible. Free promotions can be especially useful for the first book in a series, where a large number of downloads may lead some readers to continue with later books.
A discounted ebook promotion may make more sense when your priority is immediate paid sales rather than maximizing the number of readers who try the book.
Neither approach is automatically better. Consider your genre, whether the book is part of a series, your regular price, and your broader marketing goals when choosing between a free and bargain promotion.