Two people start businesses in the same town. Alice works hard, works long hours, concentrates on her business. Bob fails to do this. Alice drives Bob out of business.

The point is to balance consequences of everyone's actions for everyone. In your case, Alice works hard and drives Bob out of business because she gains something in it (as the smoker did gain something (pleasure) from smoking). But the smoker could gain the same pleasure from smoking at another time (though if smoking was forbidden everywhere, that would be a different matter) for little annoyance. Alice could not do with changing business to help Bob, this would be a huge strain on her. So, you see, there is a large difference in the two examples, though I grant you they seem similar. Now, you might also say that being exposed to the smoke is only a small inconvenience, but this is to be compared to the small inconvenience for the smoker. As a side note: I'd have different views on your example if Alice was specifically trying to get Bob out of business, and depending on the methods she was using to further these ends.

capitalism is the process of creative destructionism

Life as a whole is, whether at the micro level of one's life or at the macro level of evolution. -- Vincent Penquerc'h