You can probably go further than that. Municipal services can be unbundled and can operate without a geographical monopoly. This is already widely done for cable and telecoms in the US and UK and for electricity and gas in the UK. Some countries do it for water and sanitation services. There are examples worldwide of it being done for transportation, refuse collection, health and education. Arguments that such services are a 'natural monopoly' are usually promoted most strongly by those who wish to operate that monopoly with government protection.

I tend to think that the right of exit is the ultimate and fundamental check on such abuses of power. This is why I favour decentralization / federalization / devolution as improvements to the status quo of increasing centralization of political power. I think that on more or less every level of government we would benefit from decentralization of power. City-wide bylaws on noise pollution are too coarse-grained for example. An entertainment district or an area popular with students should have different standards than a residential area with many working families. Zoning rules are an attempt to make such allowances but I think private solutions are likely to work better. I'd at least like to see them tried so we can start to see what works.