Economic moat refers to the competitive advantage a firm has over its peers.It is a structural feature that helps to ring-fence a firms profitability. It enables to earn return on capital lmuch higher than the cost of capital
It is an lentry barriers that prevent other companies or competetors from reducing a firms profitability.Imagine that a company has lot of competitors and doesn't has an economic moat. , competitilon will enventually drive return on capital down to the cost or even lower.
Types of Moats