Undercutting is an issue which MMO gamers have brought upon themselves with their constant desire for having an auction house. You get a single location in which everything is sold, and all sellers want to sell their product without risking the loss of whatever it costs them to place the item up. Solution: Undercut to sell things well.

Sure it might look like you make some less bucks, but on the many items which otherwise go left unsold you do not pay the auction taxes over and over.

Personally I have always preferred the more traditional market within MMO's due to that though, personal shops in which you could play a lot more with price depending on the location where you set up shop. Also undercutters were less of an issue with the few exceptions of those setting up shop right next to you, however definitely not present in such numbers as seen within auction houses.

Such personal shops are much more like a true market. Some might be selling it cheaper, but just like when you go shopping and you're unaware of the shop in the back alley selling it for less the same goes ingame. Whereas an auction house is like an online price-comparing site with as additional bonus all vendors in this case being 'equal'. The cheaper item will not come from a store with a crappy service, as there is no difference in that within WoW. So people will always keep undercutting, as it's just another way of maximizing income even though it's less profit per item.

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