> Externalities don't exist in anarchic systems

Sure they do. I do a thing, it benefits me but causes a problem for my neighbor in the process, I say "oh well fuck him", that's a textbook externality.

> they have equal power to retaliate in kind

A convenient fiction often engaged in by proponents of anarchy. In practice if you compare pairs of people at random you will find almost none that can reasonably be described as equal. Equality is something imposed by the law in an attempt to improve our lives on average.

Anarchy lasts exactly as long as it takes people to start banding together and no longer.