This is an issue that drives me up the F'n wall! Undercutting is an essential part of economics. Trust me, we need it. But-

What drives me insane is the retarded way that a good 96% of the playerbase goes about it. Undercutting should be used only to bring their name to the top of the list. Nothing more. Once you are at the top, any further amount by which you undercut is useless and detrimental.

-Undercutting by more than 1 gil does NOT magically create additional demand in your buyers. If you undercut by 29384592348523945872349587324958732459843 gil, someone out in the world isn't going to suddenly find themselves overcome with an inexplicable and driving need to go buy your crap.
-Undercutting by more than 1 gil does NOT increase the speed by which a stable market buys. Keyword here is "stable." This refers to the items bought/sold regularly each day. Food, potions, leveling crafting mat, etc.

I can't wrap my head around just how stupid people can be...