An Economic Moat is a term that refers to a business's ability to maintain a competitive edge over its competitors. The existence of an economic moat can protect a company from being forced out of business by its competitors. There are several factors that can contribute to the creation of an economic moat, including economies of scale, proprietary technology, and brand loyalty.A company with an Economic Moat can earn higher profits than its competitors because it has some sort barrier that keeps new entrants from entering the market and competing with them on price.For example, if a company has patents or copyrights on products or processes that no one else can replicate then they have created an Economic Moat around their business.Other ways to create an Economic Moat include having exclusive access to key resources or distribution channels, being the first-mover in the market, or having loyal customers who are not easily lured away by lower prices from other companies.
