The externality isn't the transportation, it's the benefit that those transported offer to employers, merchants, entertainment venues, etc. Few transaction capture systems properly ascribe all value and/or costs, the more so in the case of public goods.
It's the same reason why there are (in addition to specific taxes for gas or vehicle registration) general taxes for roads / streets / highways, or schools or other infrastructure. Even those who don't use them directly benefit indirectly.
Not all goods and services have such externalities, though in your specific case of milk it's interesting to note that agricultural marketing boards (the milk advisory board in the US, also commodity boards for raisins, cotton, beef, pork, and poultry) exist which pool marketing power among individual farmers / producers. Vaccination and public health is another case where there are very strong positive externalities which argue strongly for subsidized (or even mandatory) vaccinations to provide herd immunity. Another interesting case is the situation of totally drug resistant tuberculosis. I'd submitted an HN item on this a few weeks ago, the dynamics of treatment are such that it's very contrary to the principles of individual discretion / freedom and privatization:
In particular: there is no treatment. Once you've got the baccillus, you've got it for life. Some people are asymptomatic carriers, some exhibit symptoms and typically die, though over the course of several years (4-5 typically). Total isolation and quarantine is required to prevent spread. Which means that if you you want to encourage people to cooperate with quarantine, you'd better make it an appealing option. Which means: you're paying to put these people up in an isolated, shadow community, for the rest of their natural lives.
It's the same reason why there are (in addition to specific taxes for gas or vehicle registration) general taxes for roads / streets / highways, or schools or other infrastructure. Even those who don't use them directly benefit indirectly.
Not all goods and services have such externalities, though in your specific case of milk it's interesting to note that agricultural marketing boards (the milk advisory board in the US, also commodity boards for raisins, cotton, beef, pork, and poultry) exist which pool marketing power among individual farmers / producers. Vaccination and public health is another case where there are very strong positive externalities which argue strongly for subsidized (or even mandatory) vaccinations to provide herd immunity. Another interesting case is the situation of totally drug resistant tuberculosis. I'd submitted an HN item on this a few weeks ago, the dynamics of treatment are such that it's very contrary to the principles of individual discretion / freedom and privatization:
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3631557/
In particular: there is no treatment. Once you've got the baccillus, you've got it for life. Some people are asymptomatic carriers, some exhibit symptoms and typically die, though over the course of several years (4-5 typically). Total isolation and quarantine is required to prevent spread. Which means that if you you want to encourage people to cooperate with quarantine, you'd better make it an appealing option. Which means: you're paying to put these people up in an isolated, shadow community, for the rest of their natural lives.
Think about it.