Pat Dorsey, formerly Morningstar’s director of equity research, wrote this as a practical field guide to identifying economic moats — the structural competitive advantages that let a company sustain high returns on capital for years without being competed away.

Four sources of real moats

Dorsey narrows genuine moats down to four categories: intangible assets (brands, patents, regulatory licenses), switching costs (the friction and risk a customer faces leaving for a competitor), network effects (a product that gets more valuable as more people use it), and cost advantages (structural, not temporary, ability to produce more cheaply). He’s explicit that a great product or a popular brand alone is not a moat unless it maps to one of these four mechanisms.

What isn’t a moat

A significant part of the book’s value is negative: it walks through commonly mistaken “moats” that aren’t durable — a good management team, a large market share achieved through spending rather than structural advantage, or a hot product with no switching cost behind it. Growth without a moat, in Dorsey’s framing, just funds a competitor’s eventual entry.

Moats erode

Dorsey is careful to frame moats as a spectrum that changes over time rather than a permanent label — a company can have a widening moat, a stable one, or an eroding one, and misjudging which direction it’s moving is one of the more common analytical mistakes.

Where it shows its age

Some examples reflect industry structures from the 2000s (traditional media, early-2000s retail) that have since been disrupted by exactly the kind of new entrant the book warns about — which, read a certain way, is itself a demonstration of the framework working as intended.