Apart from your first sentence, I completely agree with everything you said. My disagreement with your first is a partial one. What you describe is an ideal almost mythical free market. In such a market your arguments would hold true, if it existed.

The key here is as you said "I should be made to pay that nickel". Unfortunately free market forces alone will not make you do that. It will be in your interest to hold on to that nickel. It is here the free market proponents invoke goodness of human kind or some other force or argument external to the free market principles.

Another problem with the practice of free market is that corporations are typically structured to maximize, not the total value out of a resource, but the rate, i.e. the value extracted per unit time. It makes perfect sense for them because for several reasons (and also by way of force) they can keep the acquisition cost of a substitute resource very low.

Governments arent ideal either. But a (democratic) government is shaped by the amount of active interest a voter takes. So the control over it is much more direct in comparison.

Sans the two major loop-holes, free market is a damn good system.