An “economic moat” is a durable competitive advantage that helps protect a company from rivals over an extended period. Morningstar also uses formal moat ratings with its own methodology; do not treat every casual claim that a business has a moat as equivalent to a specific Morningstar rating.
ReviewedEvidence1 sourceSectionPhrases & Idioms
Quick answer
An “economic moat” is a durable competitive advantage that helps protect a company from rivals over an extended period.
Key details
Canonical Formeconomic moat
Core Meaninga durable structural competitive advantage that helps a company keep competitors at bay and sustain excess returns
Further guidance
Contextual Examples
A low-cost distribution network may be discussed as part of an economic moat if it remains difficult for competitors to replicate.
Calling a company’s popularity an “economic moat” is incomplete unless the advantage is durable and defensible.
History Boundary
Current documented meaning is published without asserting an exact inventor, coinage date, or absolute first use.
Meaning
a durable structural competitive advantage that helps a company keep competitors at bay and sustain excess returns
Meaning Boundary
A temporary lead, one successful product, or recent share-price strength is not by itself proof of a durable moat.
Practical Use
Use “economic moat” in business or investing discussion for a durable competitive advantage that helps protect a company from rivals over time.
Tone Boundary
The term is analytical investment vocabulary, not a guarantee of future returns; name the specific advantage being evaluated.
Usage Boundary
Morningstar also uses formal moat ratings with its own methodology; do not treat every casual claim that a business has a moat as equivalent to a specific Morningstar rating.
Sources and evidence
Sources are shown with the role they play in this guide. Historical or style-sensitive claims are kept within the evidence boundary described above.
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A “buyer’s market” is a market where supply exceeds buyer demand, typically giving buyers more bargaining power and keeping prices lower. It can apply in housing and other markets; the phrase describes the balance between supply and demand rather than guaranteeing a particular price outcome.
In corporate finance, a “poison pill” is a defensive measure a company uses to make a hostile takeover less attractive or harder to complete. The guide treats it as a specialized current business term rather than inventing an origin story.
A “price war” is aggressive price competition in which rivals repeatedly lower prices. The guide keeps current meaning separate from unsupported origin claims.
A “race to the bottom” describes competitive pressure that pushes participants toward ever-lower costs or standards. The guide keeps current meaning separate from unsupported origin claims.
A “seller’s market” is a market where demand exceeds available supply, typically allowing sellers to charge more or sell more easily. The phrase describes an imbalance favoring sellers; it does not guarantee that every seller or item will achieve a higher price.
“A dime a dozen” is a chiefly US idiom for something very common, easy to find, and not especially distinctive. The wording can carry a dismissive tone when it suggests that something is readily replaceable.
“A drop in the bucket” describes an amount that is very small compared with what is needed or compared with a much larger whole. Cambridge labels it as the US form and gives “a drop in the ocean” as the UK counterpart.
