The argument appears in most anarcho-capitalist writings. David D. Friedman's "The Machinery of Freedom" probably explains it best. The book is now free in PDF form from Freidman's website.
Here is sample passage.Personally, I have one big problem with the argument. The argument is advocated by people unfamiliar with lethal violence in real life. Although killing can be costly, the mere threat of killing usually suffices to impose will. And credible threat is cheap. Consider any failed nation--warlords inevitably emerge. In this, I agree with Ayn Rand, not with Friedman and others.