Answer to Question #68831 in Microeconomics for Matas

Question

Apart from the existence of a wage floor, is there any other way to explain the relative absence of undercutting behaviour in the labour market?

Answer 1

Predatory pricing (also undercutting) is a risky and dubious pricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.
Undercutting behaviour in labour market is relatively absent because labour wages can't be much more lower than the equilibrium wage.