Amazing analogy

Fundoo Professor

The Economics of a Toll Bridge

Buffett tells us that the fundamental economics of a toll bridge are excellent. However, this post is not about a toll bridge. Rather, it’s about the “functional equivalents” of a toll bridge.

Now, apart from the reasons Buffett talked about, what are the other reasons that make a toll bridge a very good business model?

  1. There is usually no alternative. People who have to move from A to B, have to use it. The owner of the toll bridge won’t let you through unless you pay the toll. That’s the key phrase: pay the toll. Keep this phrase in mind because we will need it later.
  2. Even if there is an alternative, people still prefer to use the toll bridge. That’s because in the mind of the user, it does not make sense to use the alternative. Now there can be all kinds…

View original post 1,173 more words

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