So long as the market board lists the items currently on it with the selling price the seller has set there will always be someone that will under cut everyone else, and when someone undercuts them they go back in and undercut even more.

I think the best way to deal with the whole under cutting thing would be to not list prices beside the items. Rather remove the sellers price on current items and leave the price history for items that have already sold to base pricing off of, that system worked in the auction house in ff XI yes there was still undercutting but you didn't see prices drop from 10k for an item down to 4k or lower in a couple hours.