I know how frustrating it can feel to not be paid commensurate to your perceived value of an item.

Reasons for undercutting:

1. Quick $ with lower profit margin.
2. A byproduct of which they have no attached value to.
3. "Dumping"

IF you are really adamant that you want this particular market, the best way to handle the situation is to control the market with your gil. Purchase and flip for a profit. That way, you both earn a profit on your own terms.

Consider how you got into your market in the first place. Probably through a method not so different from the undercutter you are complaining about -- competition. If you and fellow sellers of the same market are not very competitive and sell at the relatively same price, then you guys are operating way worse than the under cutter, which is collusion through price fixing.