Quote Originally Posted by Naylia View Post

If they keep undercutting you, and you keep undercutting them, and no one has bought either item yet -> then you sure haven't reached market equilibrium yet.

Lots of competition drives prices and profit down to the point where price = cost. You should never expect to make a bunch of money selling commodities in a free market. There's always someone out there who is reducing the cost of production and will undercut you.
Very wise Naylia is.