Where does undercut collide?

In economics undercutting is setting a price just below a competitor's so as to capture the market, the logic that drives Bertrand price competition toward marginal cost: if rivals sell an identical good, each has an incentive to shade price a little lower and take all the demand. Tirole's The Theory of Industrial Organization formalises this reasoning and its limits, including why firms may avoid the undercutting spiral. The referent is a strategic pricing move in a market, measured in price and market share, and it has nothing to do with a groove melted into a weld or a cut made beneath a block of ore.[1]

Unit

The price set below a rival's, and the resulting shift in demand or share

Recovery means

Not applicable

Measured by

Observed as a price set below competitors' and the associated change in quantity sold or market share

In welding undercut is a defect: a groove melted into the base metal along the edge, or toe, of a weld that the filler metal fails to fill, leaving a notch that thins the parent section. Because that notch concentrates stress, undercut is a common cause of fatigue cracking and is limited by welding codes. Cary and Helzer's Modern Welding Technology describes how excessive current, arc length, or travel speed produces it and how it is measured. The referent is a geometric flaw at a weld boundary, measured by depth and length, unrelated to shading a competitor's price or caving ore from below.[2]

Unit

The depth and length of the groove melted into the base metal at the weld toe

Recovery means

Removed and corrected by grinding and re-welding to fill the groove

Measured by

Measured by depth with a weld gauge and length along the toe, against code limits