An **[[Economic Moat]]** refers to the strength of a company's ability to maintain a competitive advantage over its competitors. ^about The term, usually attributed to [[Warren Buffett]], is an analogy to the [[Moat|moats]] used by medieval castles to deter assaults and stymie invaders. Sieging a castle surrounded by a deep ditch (often filled with water) required specific, strategic, and deliberate efforts to overcome. This made such castles highly defensible to casual and/or under-resourced assaults. The moat, in the economic sense, often takes the form of one or more of the following factors: > #### Economies of scale & monopoly > The company is so much larger than its competitors, and/or its operations so much more efficient, and/or it already dominates its market (which may be niche and/or saturated), allowing it to simply sell its products or services at a lower price point (of potentially higher quality) than its competitors. > #### Switching costs & vendor lock-in > When it is difficult, expensive, and/or otherwise undesirable for a customer to switch away from a particular product or service. This can be due to proprietary technology, high migration or setup costs, and/or high reward value for customer loyalty. > #### Intangible value > Strong branding, reputation, and public reception that cannot be quickly, easily, or deterministically developed by competitors.