 |
|
|
|
|
|
| Course 109:
Finding Economic Moats |
| Intangible Assets |
|
|
|
|
Some companies have an advantage over competitors because of unique nonphysical, or "intangible," assets. Intangibles are things such as intellectual property rights (patents, trademarks, and copyrights), government approvals, brand names, a unique company culture, or a geographic advantage.
In some cases, whole industries derive huge benefits from intangible assets. These industries, such as drugs and software, are exactly the opposite of commodity industries. Companies in these industries live and die by their ability to generate intellectual property (IP) rights such as patents, copyrights, and governmental agency approvals. The great thing about IP rights is that they are protected by law, which means a company that owns a lot of patents or copyrights can raise prices without fear of being undercut by competitors. This can be one of the best types of economic moats because it virtually guarantees a monopoly on a product until the IP rights expire.
Next:
The Network Effect >>
|
