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Undercutters play into the hand of economic barons who buyout the lowest and reprice higher to create a total, or near-total, monopoly so that the people who actually need them are not getting a good price.
There is an oversight of capitalists who think that greed can be turned on itself to better the needy.
However, you fail to take into account the invisible hand of the market - remember, zero-sum-gain doesn't exist in RL.
Recall that the market is more powerful then the individual and that supply and demand not only dictate price, but also dictate competition.
So when this wanna-be robber baron attempts to corner a market by buying up everything and then jacking up the price, he'll actually encourage competition from others - I see that item X has gone from 10g to 15g - I'm going to make sure to put item X up and maybe even seek it out, ie/pharm it.
Myself and others now trying to enter the market do one of two things -
1) We undercut the robber baron so no one buys his stuff and he's just sitting on gold
2) He continues to buy up our slightly cheaper items to preserve his monopoly
When #1 happens, the robber baron is eventually forced to dump his stuff onto the market, resulting in the prices dropping back to normal or lower.
When #2 happens, pharmers are encouraged by the fast sales we're getting so we keep pharming until we break the robber baron's bank at which point, again, the market returns to normal after a brief plunge from the robber baron dumping his stuff to get some of his gold back.
So as you can see, the attempts by a robber baron to corner the market only really benefit those who can pharm the items he's trying to corner and while there is a short-term increase in price, in the end, the robber baron is the only one who really gets hurt.