Pricing Investor Impact

66 Pages Posted: 9 Nov 2022 Last revised: 19 Dec 2023

Date Written: July 1, 2022


This paper presents a generalized supply and demand framework for asset pricing in a production economy with externalities. The framework challenges conventional wisdom and produces a microfounded model in which unsystematic risks, supply-side effects and the potential for investor impact on the externality are all priced. Calibration to empirical results suggests a $1 increase in long-term investor demand generates 3 cents of firm assets, but with large potential cross-sectional variation. This implies significant opportunities for positive impact, but also for harm if demand shifts are too aggressive. The framework provides a foundation for quantitative models that address topics like universal ownership and impact investing, including defining the concepts of contribution multipliers, prices of impact, impact returns, and impact frontiers.

Keywords: Impact investment, supply and demand curves, Investor impact, Investor contribution, Enterprise impact, ESG, Greenhouse gas emissions, Impact Frontier

JEL Classification: C3, G11, G12, G30, H41

Suggested Citation

Harris, Jonathan, Pricing Investor Impact (July 1, 2022). Available at SSRN: or

Jonathan Harris (Contact Author)

Total Portfolio Project ( email )


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