There are a couple more points about free market provided defense that I have some thoughts about.
What about roving gangs, how do those fit in? Gangs aren’t states because they aren’t accepted force. The term accepted is obviously subjective, but I think it can still be a useful concept, even if used loosely. It is accepted if most people think that it is the way it should be done. People paying the mafia not to break their legs don’t believe that is the best way to do it, but they do believe taxes are necessary.
Nuclear weapons, or other weapons of mass destruction, are a blunt-force tool that can be used by a state to achieve success. States however are composed of individuals, and they must agree that such extreme violence is necessary. A state is not going to defend itself from a non-threat, unless the majority of citizens believe it to be a threat.
The free market has mechanisms of defense that are superior to the state.