Lease or Moat — an economic moat test, run as a gated protocol
Is your competitive advantage an economic moat, or a lease?
A commanding position can be a lease the market has priced as a moat. Same customers, same interface, same growth curve. What separates the two is one structural fact the market prices last: who owns the constraint the position runs through. Move it below and watch the reading flip.
For any business whose position runs through something another party could withdraw. For example: a software company whose distribution runs through a platform; a manufacturer with one critical supplier; a business that operates under a licence, grant or concession; a company whose network or site is what customers come for. These are situations to examine, not readings decided in advance.
Run the free protocol for a structural reading. The Reading Report adds the reasoning behind it, the state of its evidence, the answer it turns on and what would change it. See eleven worked cases →
Leaseconstraint controlled upstream
Conditionalcredible path to control; threshold not crossed
Owned closureconstraint controlled by the company
CONDITIONALa company with real, visible dominance
A credible path toward owning the constraint, but the threshold isn't crossed. Still a lease today — and a strong one — until a named asset moves from rented to controlled before the window closes.
The one variable: who controls the decisive constraint?
Everything else is held fixed — the dominance is real in all three. This is the only thing that changes.
What's protected
the position, for now
What leaks upstream
the capability layer
Who collects the rent
the company — if it crosses first
Same firm, same visible dominance in all three. Ownership of the constraint is the hinge — the one thing the market tends to price last. This illustration isolates one variable to explain the protocol; a full reading also weighs the position, the evidence and the scope.
or run the full protocol — two gates, five questions
Gate 1 · Constraint
1ASubstitution1BWithdrawal
→
Gate 2 · Capture
2Ownership3Rent capture4Flashlight5Transition
→
Reading
✓Verdict
New to the protocol? Four things to know before you start
The decisive constraint is the one thing a rival would have to reproduce to take the position. It is not simply what is scarce, expensive or most talked about. The report tests it three ways: could a rival take the position without it, does the position disappear without it, and can customers route around it?
Owning the product is not controlling the constraint. A company can own its interface and brand while the constraint the position runs through (a licence, a platform, a supplier, a grant) is held by someone else.
The illustration above holds dominance constant (same customers, same growth) and changes only who controls the constraint. That is the variable the reading turns on.
A path to control is not control. A Conditional reading means the transfer has not happened yet. It stays conditional until a dated, observable change in rights takes place.
Worked cases — read against the gates
reading record + falsifier
Beyond software: more readings from the paper's annex