system
Given the following post, respond as if you're commenting on Reddit:
human
Economic theory says that undercutting your competitors is bad for everyone as total revenue of all market participants reduces. How did amazon survive and what makes investors believe in its potential when it undercuts hot sellers on its platform (amazonbasics)?

The question might be dumb but I’m new to economics and can’t comprehend this.
gpt
It’s fine for the undercutter if they successfully deter entry or force rivals to exit, especially in industries with large economies of scale, where their volume will lower their costs quickly. Amazon has seemed to pursue this strategy—sacrifice short-term profits for volume and economies of scale.