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When you have competition in security there are no borders. Security companies are not tied to the land. I can have security company A and my neighbour can have B and his neighbour can have C.
Each company will have many customers dispersed throughout the land just as say internet providers do.
I am constrained by physical infrastructure to a finite number of ISPs.
Security providers are equally constrained by infrastructure to a region.
For example, my local county puts up for bid the area contract for Emergency Medical Services (EMS) every couple of years. The EMS contract basically entails providing medical transport service to the nearest hospital. This does not take a huge infrastructure but it is enough that we normally only see two bids and this is because we are in a border region between two EMS companies. A third bid has not happened in a decade. That third bid has to resources to put people and equipment into the region. Lack of adjacency to the area becomes cost prohibitive.
A similar problem occurs for provision of more physical security in my neighborhood
My local neighborhood is outside of city limits. Our police security is provided by the county. We, as a group, decided it was not sufficient for our needs. We then let out an RFP and received bids from two companies. One was serving the community immediately up the road from us, the other was serving the community immediately down the road. Again, proximity drove the economics of the bids. The company providing services in the next valley over declined to submit a bid since they did not have resources in the area.
Unlike the RFP to have someone code your latest and greatest computer game, security is tied to location. I would be foolish to hire a security team that did not have a physical presence in my immediate area. A security company would be foolish to accept contracts in places where they have no presence. Neither I as a customer nor they as a vendor want their business to be dispersed across the land. This leads to a natural monopoly.
The more power and authority given to the provider, ostensibly to perform their responsibilities, the more defined the borders are.
The EMS company in the example above does not provide services beyond the end of the dirt road. Instead an air evacuation service using helicopters is called in. Different company, different bids, different service area and a different price structure. When I chose to go beyond the dirt road, I purchase insurance in case I get a broken leg at 3500 feet in a box canyon. It covers the helicopter evacuation.
The security guard in my neighborhood has a cell phone and a camera. He documents and calls for back up. The sheriff provides the physical security at gun point. However, the sheriff does not have jurisdiction in the town I drive through on the way to work nor in the harbor district I actually work in. The town has it's own police force. The harbor district has a security force and a mutual aid agreement with the federal coast guard facility. Again, borders that are clearly defined by resources, authority and responsibility.
Simply put, in theory there is no difference between the theory of market based security and the practice of security. In practice, market based security is not infinitely divisible with neighbors A, B and C each choosing a different policeman to watch their street.