Economics 101 - If the blocks aren't full, why are people paying any transaction fee at all? Is there a network minimum?
Price being the metering mechanism, when blocks are full Tx fees serve the function of prioritizing Tx's.
If blocks aren't full, why do people pay a Tx fee at all? Do miners not process Tx's with no fees?
There is a network minimum for fee/kb, which can also be decreased over time to satisfy the end user when it becomes necessary. However the network does allow some free transactions, which can be given lower priority.
The concept introduced in the design paper is not that users should outbid each other on fees (as happens when there is a quota on blockspace set below market demand), but that the fee should be minimal so as to enable the use as electronic cash.