Definition
An economic moat is a durable competitive advantage allowing a company to maintain above-average returns on capital. Types include network effects (Facebook), cost advantages (Walmart), switching costs (Microsoft), intangible assets (Coca-Cola brand), and efficient scale (utilities). Wide moats protect against competition and support long-term profitability.
Example
Visa has a wide moat from network effects - the more merchants accept it, the more valuable it becomes to cardholders, and vice versa.
FAQ
What is Economic Moat?
Sustainable competitive advantages that protect a company's profits.
Why is Economic Moat important?
Economic Moat helps investors evaluate fundamental analysis and make more informed decisions.