What is Economic Moat?
An economic moat is the structural advantage that prevents competitors from eroding a company's returns. Buffett's term. Common moat sources: network effects, switching costs, intangible assets (brands, patents), cost advantages, and efficient scale. Wide moats support high ROIC for long periods.
Formula
Qualitative — assessed via market share trends, gross margin stability, and customer retention.
How TopTier Strategy uses Economic Moat
Moat assessment underpins our framework's emphasis on durable Returns and stable margins — the metrics where moats show up in the numbers.
Related Glossary Terms
Other concepts in the Other pillar.
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