So "contracts" are possible. So MANY PEOPLE may choose to contract together, such as in DRO's. But forming a "government" as we see it now, that has the ability to force itself onto "non-contract parties," such as you the outsider THAT DID NOT contract into this DRO, would NOT BE BOUND by this "large contract entity" that wishes to pull you over and force you to do things; no that would not even be kosher with the idea of "contracts" or contract law. This is not very difficult to understand.
So "will they be allowed?" Well that is a trivial question. We have speed limits right now. "Will speeding be allowed?" Well, it kinda happens all the time.
So towns could create some "government type large contract entity" that has the power to pull you over, handcuff you, kidnap you, hold you captive, jail you, imprison you, beat you, steal from you, tax you, garnish your wages, and so on...
But WILL NEIGHBORING TOWNS ABIDE to these formed "large contract entities;?" When the neighboring town individuals are encroached upon by this new entity? And they fall victim to unagreed upon kidnappings, beatings, imprisonments, pull-overs, thefts, taxings, garnishings...?
I don't think that a "liberty minded society" that worked to achieve even near minarchism would be largely succeptable to such simple failings. If the society were smart enough to do away with centuries of oppression, indoctrination and propaganda...;
HOW COULD THEY BE so foolish to let a NEIGHBORING MAFIA form? In the style of the "boys in blue?"
So my answer to the OP is "no." These entities COULD FORM, just as speeding still happens, but that does not mean that "society will allow" for the violation that will occur.
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