|Take care in accpeting Jon Letendre's accusation in post 27. He isn't describing a normal defense agency engaging in protection. There, the hypothetical competitor is not defending its citizens. That defense agency is imitating Hitler's annexation of Austria prior to the invasion of Poland. Tsk Tsk, strawmen are for demagouges.|
However, this characterization reflects a larger problem of not imagining the concequences of each concept. Those arguing for anarcho-capitalism are seated in the consumer's seat in the fantasy. The way to truly test it is to place yourself in the CEO position of your own defense agency.
What are you going to advertise? Do you declare what price you will charge? That is easy enough for a passive business like a gas station, but this is anything but passive. People will want some marker for how you justify that price, else a fly-by-night will be the tool of con men. The only distinction I can draw is number of criminals captured by one already in operation. This, however, is misleading (difference of crime density in areas).
Also, don't put these agencies in a vacuume. Sure, a minarchist government might allow another police agency to handle an area and save cost for itself, but how would banks react? They could charge different rates for people protected by a new agency as insurance. Mind, I don't think this unjust. I mention it as economic incentive against the outcome of anarcho-capitalist agencies. Economic historian Frederic Lane supports this (indirectly) in his paper "National wealth and Protection":
An essential charge on any economic enterprise is the cost of protection, its protection from distruption by violence. Different enterprises competing in the same market often pay different costs of protection, perhaps as tariffs, or bribes, pehaps in some other form. The difference between the protection costs forms one element in the income of the enterprise enjoying the lower protection cost. This element in income I will call protection rent. Just as differences in the fertility of land produce rents for the owners of the more productive fields, so differences in the difficulties of protection produce rents for enterprises which are more easily or efficiently protected. To the categories traditional with the economists, that is, wages, interest, and land rent, can be added for present purposes the category of protection rent.Above all defenders of anarcho-capitalism, never forget that we live in a world with competing defense agencies. To switch, you move to Hong Kong or Switzerland. They aren't minarchist, you say. What makes you think competing governments wouldbe? In fact, force in the market has a unique effect, much like water's decrease in density when it freezes. Protection is the only resource that has a price increase when in competition. Disagree? Look at Medieval Europe and compare its economic restrictions to those under the fewer monarchs of the 1700's. The restrictions under Louis 14th were still exorbitant, but far better than five centuries before. And this bears out logically:
I am a police chief. Are my cost higher when there are many mobs in my city competing to engage in protection rackets or when there are few?
Lane, Frederic C. Venice and History: The Collected Papers of Frederic C Lane. "National wealth and Protection." John Hopkins Press, Baltimore. 1966.