This is only worth it if you are committed to that particular market and it is a very particular situation, and the value of the item is relatively secure outside of the occasional bulk undercutter like you mention.
I’ll give two examples why buying out a bulk undercutter is usually a bad move.
Example 1: Void Crystal Market (medium demand market, low supply)
The Void Crystal Market is a mid-level value market. The value of a Void Crystal is neither high nor low around 40g each; the supply is contributed to by a very minor amount of players, the demand is even lower (mostly sought after for level 70 twinks, and one or two other relevant profession recipes). If a seller suddenly places 5 void crystals at 33 gold (>15% undercut) and all other crystals are going for 40g, should you buy out their market?
Generally, No. Because the supply is pretty limited, void crystals are sought after as individuals or as packs (4-6). If you buy out the market with the motivation of making a profit, you are at most, hoping to make a profit of 35g total (but in reality less than this because of AH tax) selling these crystals at 40g value. However, this is not quick cash. In order to sell these 5 void crystals you will have to slowly insert them into the market over a week, depending on the sales. If you throw them all immediately onto the market at 40g value, it encourages other sellers to undercut because of supply sauration. However, if you undercut and say sell these crystals at 39g, you still pressure other sellers to undercut your value, because it appears that the value of a void crystal is dropping. In both cases, your usual 40g practice is weakened. So instead, what should you do with the undercut crystals? Hold onto them, promoting the idea that the market is pretty tight and strong at the value of 40g. This comes with the reality that other sellers will also benefit from your caution. But that is also market health.
Example 2: Primal Nether Market (low demand market, medium supply)
Primal Nether is inventory trash, with a close vendor value (it’s value to vendors is quite high @50s or 1g) and auction house trash. Noobs often put in on the market for the same or lower price as vendor would buy it becuase they assume because its blue and a material vendors won’t want it. That said, the supply is always quite small, primarily due to its nature as a Burning Crusade item. But the market, at a glance, looks good to enter into as a competitive seller. Why? Because, if you have even 50g, you stand to take over the market.
Except, that’s not what happens. The reality is, you can buy out the entire market for 15 gold and then the market is completely dry and you can set the price. You can set the price at anything, 40g, 4g, 2g. You need to make 15g to break even or make profit. However, the reality is, no matter what you try to do, the Primal Nether market always, over the span of half a day returns to 1g market value. This is because the demand is that low.
Example 3: High demand, high value markets
Obviously, if you magnify these examples and then also go into the high demand, high value markets, like lichbloom, primordial saronites, dragon eye, arctic furs, 15% is a lot, nearly 150 gold. However, in my experience, the profit to gain by competing with bulk undercutting at even 5+ pieces is very rarely worth it unless you are dedicated to the market and don’t expect to make profit for a week. But even then, who’s to say any undercutter won’t appear again and then what? You will feel the need to bulk buy again etc etc. Very rarely worth it imo. Especially with such giant auction house buyout taxes on this upper echelon of goods, that the profit you stand to make from even individual buyouts of undercutters, is in the 130g profit range. But these markets are also, quite volatile because they attract the most eyes and most eager new competitors