What should a kid do if another kid undercuts their price?

The instinct is to go lower, and it is the one move that guarantees everybody loses.

A price war between two kids has exactly one ending. They undercut you, you undercut them, and a few rounds later you are both doing the same work for almost nothing while the customers enjoy their cheap lawns. Neither of you has more customers than you started with and both of you are earning less.

Look at what would actually be lost. A customer who leaves over two dollars was never loyal, and they will leave the other kid over two dollars in a month when somebody cheaper turns up. That is not a customer, it is a person shopping, and chasing them costs more than keeping them is worth.

Compete on the things price cannot copy. Turning up when you said you would. Doing the edges as well as the middle. Sending a message when you are running late. Remembering that one customer wants the clippings bagged. A cheaper kid who forgets a Saturday loses a customer permanently, and that customer usually comes back to whoever was reliable.

The second sale is where this is really settled. Anyone can win a first job with a low number. Nobody wins a fourth job that way.

There is another option that sounds strange and works. Talk to them. Two kids doing the same thing in the same neighborhood can split streets, hand each other overflow, and cover for each other when one is away. Andre and the rival in the book run into a version of this, and the outcome is the thing the whole book is arguing for: an open hand fills faster than a closed fist.

Being busy is also its own answer. If your Saturdays are full at your price, the other kid's number is not your problem.