There are three or four in walking distance of my house, although I don't frequent them often. I've used them more as a place to leave books than to borrow, although I have found a few good reads now and again. I think they fill a similar niche as do the bookstores at thrift shops: if you don't want to pay for the latest bestseller, simply wait a month or two and pick it up at Goodwill for a dollar.
LFLs are good for serendipitous reads, but I don't imagine they undercut bookstores or full-size libraries very much, since people who head to those places are most often looking for a specific book or at least a wide selection from which to choose.
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