Its not really possible to look at piracy in a manner where a definitive answer can be given. Certainly piracy reduces the incentives for new creative output but the technology which allows piracy to occur also increases creative output (simple example, file sharing makes it easier to pirate but also easier to publish).

While I am certain we can make some good tweaks here and there the current cold war where piracy is both discouraged but largely unenforced seems to be close to optimal. As creative products have basically no elasticity of substitution there are very few incentives for change, different products don't really compete so no publisher gains an advantage over another by adopting new distribution technology. Without torrent we probably would not have had netflix as publishers would not need to compete with piracy to distribute their products. At the same time if we had a massive increase in piracy such that there was a significant decline in the revenue creative goods generate there would have certainly been a decline in the quality and/or quantity of new creative goods.

When people talk about the economic damages of piracy, how do they address the fact that many of the things pirated would not have been purchased anyway if they hadn’t been pirated?

It depends on the study. Most examine trends in revenues or creative output after a disruptive technology becomes widespread. Music there doesn't appear to be any evidence that piracy harms markets (no change in creative volume/quality after Napster) while movies there appears to be fairly significant effects (but could simply be down to the method of distribution, I would strongly suspect that most of this effect will disappear now that digital distribution is ubiquitous).