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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