Most sellers of products do not capture 100% of the social benefit of their product. Even if a seller is a pure monopoly, there is a large amount of consumer surplus.
Even if you manage to avoid punitive damages, and impose liability only equal to actual damage done (something that I do not in fact believe you can get our current legal system to do when a photogenic plaintiff sues a deep-pocketed corporation), this will still inefficiently shut down large volumes of valuable activity whenever:
[total benefit of the product] > [total harm of the product] > [portion of benefit captured by the seller]
Most sellers of products do not capture 100% of the social benefit of their product. Even if a seller is a pure monopoly, there is a large amount of consumer surplus.
Even if you manage to avoid punitive damages, and impose liability only equal to actual damage done (something that I do not in fact believe you can get our current legal system to do when a photogenic plaintiff sues a deep-pocketed corporation), this will still inefficiently shut down large volumes of valuable activity whenever:
[total benefit of the product] > [total harm of the product] > [portion of benefit captured by the seller]