This paper presents an equilibrium model of firm growth that emphasizes multi-establishment operations. The model captures key features of firm growth and the firm size distribution in the US, and is used to analyze the effects of establishment-level distortions in developing countries. The distortions substantially reduce aggregate output and play a key role in generating cross-country differences in firm and establishment sizes. When compared to a model that considers only single-establishment firms, my model finds a 17% and 13% larger impact of distortions on aggregate output for India and Mexico, respectively. This amplification effect is due to the decreased proportion of multi-establishment firms.
