Economic Moat

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DEFINITION of 'Economic Moat'

The competitive advantage that one company has over other companies in the same industry. This term was coined by renowned investor Warren Buffett.

INVESTOPEDIA EXPLAINS 'Economic Moat'

The wider the moat, the larger and more sustainable the competitive advantage. By having a well-known brand name, pricing power and a large portion of market demand, a company with a wide moat possesses characteristics that act as barriers against other companies wanting to enter into the industry.

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RELATED FAQS
  1. What is an economic moat?

    The term economic moat, coined and popularized by Warren Buffett, refers to a business' ability to maintain competitive advantages ... Read Full Answer >>
  2. When should a company consider issuing a corporate bond vs. issuing stock?

    A company should consider issuing a corporate bond versus issuing stock after it has already exhausted all internal forms ... Read Full Answer >>
  3. How can a company control its holding costs?

    A company can control its holding costs through efficient management of its inventory and the efficiency of its overall logistics ... Read Full Answer >>
  4. How is the economic order quantity model used in inventory management?

    The economic order quantity model is used in inventory management by calculating the number of units a company should add ... Read Full Answer >>
  5. What risks does a business owner face under a business structure with unlimited liability?

    The risks that a business owner faces under a business structure with unlimited liability are literally unlimited, but they ... Read Full Answer >>
  6. Why did Warren Buffett invest heavily in Coca-Cola (KO) in the late 1980s?

    Warren Buffett found Coca-Cola an attractive investment because it had a moat and was attractively valued. Buffett began ... Read Full Answer >>
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