How do you react to being undercut?

[Shirai]

It depends, a pricedrop is usually tied with the stock on the marketboards.
Unless indeed it's something one person wants to get rid of fast but those are usually snagged quick enough for anyone to notice unless they specifically look for it in the price history.
If I see a lot of stock on the boards I usually hold on to the items for a bit and try to sell them when the supply drops again.

If supply stays at a high point but the items are still worth selling I'll just repost them at the lower price and find another resource in the mean time.
Otherwise I'll just take my losses and npc the whole load.

[ShackledDreams]

Depends on the cost and volume of the undercutting. If someone undercuts one or two of an item, I'll usually let my prices sit as they'll sell. If someone floods the market with an item, but only undercuts a hundred (or so) Gil, I'll undercut them by 50 Gil and let the stock sit. If undercut by a few hundred though, I pull my stock from the market board and let it sit in my retainer a few days to see the price goes back up. Although, in many cases, it stays at the undercut price because others see several of one item being flooded on the market and assume it must be selling really really well. It's the end result of people not using the history function or the history function only holding so many documented sales before the oldest disappear from existance.