There's no problem, and there is nothing that needs to be changed. If there's sufficient demand, then the undercutters will sell their product before yours, and you will sell yours, too. If there's insufficient demand, then the undercutters will reflect the new price, and you will need to adjust your price to match.
If you put an item up for sale, and nine people undercut you, and there's enough demand for twelve product, all theirs will sell, yours will sell, and two of the people YOU undercut will also sell.
If you put an item up for sale, and nine people undercut you, and there's enough demand for six product, six of the undercutters will sell, three of them will not, and neither will you or any of the people you undercut. You and the remaining undercutters will need to lower your price, because there's just no demand.
Cases where exactly the nine undercutters sell, and yours does not? SO very rare.
This is natural, and healthy, and there is no need for changes or adjustments, or weird taxes.