Undercutting happens naturally. There's huge supplies and highly variable demand from day to day. The problem arises when someone decides to come in, dump a weeks' worth of supply down at discount prices, creating an artificial ceiling that hurts everyone.
I'll undercut by 10-15% for fast sales, or even 1-10K as long as I get a fair profit for the trouble and bait other vendors to buy me out and mark me up. If there isn't a clear margin for profit, I won't go in on the market for that item.
Sitting on a price may work in the long run, and some markets that's particularly viable. For items in low-demand, high profit fields (such as two-stars), you simply can't price-and-ride. If you're only looking at 1-4 units sold per day, you need to be in the top 4 and hope your competition doesn't turn around and simply put up another unit above yours when theirs sells. The best solution is to gravely 'price cut' and bait a buyout or someone to come along for a discount sale.


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