Estimates of investor demand elasticity are biased when firms endogenously respond to demand shocks by timing equity issuance, as observed price changes confound demand-driven price pressure with fundamental improvements. Empirically, firms experiencing mutual fund flow shocks exhibit both higher stock returns and increased equity issuance, supporting this channel. To address this identification problem, I develop a dynamic structural model capturing strategic interactions among firms, mutual funds, and residual investors. Estimating the model via indirect inference, I find a price elasticity of 2.4 for residual investors—higher than previous estimates that ignore firm responses. The higher elasticity, combined with endogenous firm-investor interactions that cause marginal price effects to diminish with shock size, implies more moderate capital misallocation effects.