A functor from the category of directed trees with inclusions to the category of commutative C*-algebras with injective *-homomorphisms is constructed. This is used to define a functor from the category of directed graphs with inclusions to the category of C*-algebras with injective *-homomorphisms. The resulting C*-algebras are identified as Toeplitz graph algebras. Graph algebras are proved to have inductive limit decompositions over any family of subgraphs with union equal to the whole graph. The construction is used to prove various structural properties of graph algebras.
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