Economic Moat

AAA

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.

RELATED TERMS
  1. Absolute Advantage

    The ability of a country, individual, company or region to produce ...
  2. Economies Of Scale

    The cost advantage that arises with increased output of a product. ...
  3. Knowledge Capital

    An intangible asset that comprises the information and skills ...
  4. Balanced Score Card - BSC

    A strategic planning and management system used extensively in ...
  5. Comparative Advantage

    The ability of a firm or individual to produce goods and/or services ...
  6. First Mover

    A form of competitive advantage that a company earns by being ...
Related Articles
  1. Competitive Advantage Counts
    Active Trading

    Competitive Advantage Counts

  2. Advertising, Crocodiles And Moats
    Professionals

    Advertising, Crocodiles And Moats

  3. Warren Buffett: How He Does It
    Active Trading

    Warren Buffett: How He Does It

  4. Bloodletting And Knights: Medieval Investment ...
    Options & Futures

    Bloodletting And Knights: Medieval Investment ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center