Biofilm formation is an important and ubiquitous mode of growth among bacteria. Central to the evolutionary advantage of biofilm formation is cell-cell and cell-surface adhesion achieved by a variety of factors, some of which are diffusible compounds that may operate as classical public goods – factors that are costly to produce but may benefit other cells. An outstanding question is how diffusible matrix production, in general, can be stable over evolutionary timescales. In this work, using Vibrio cholerae as a model, we show that shared diffusible biofilm matrix proteins are indeed susceptible to cheater exploitation, and that the evolutionary stability of producing these matrix components fundamentally depends on biofilm spatial structure, intrinsic sharing mechanisms of these components, and flow conditions in the environment. We further show that exploitation of diffusible adhesion proteins is localized within a well-defined spatial range around cell clusters that produce them. Based on this exploitation range and the spatial distribution of cell clusters, we construct a model of costly diffusible matrix production and relate these length scales to the relatedness coefficient in social evolution theory. Our results show that production of diffusible biofilm matrix components is evolutionarily stable under conditions consistent with natural biofilm habitats and host environments. We expect the mechanisms revealed in this study to be relevant to other secreted factors that operate as cooperative public goods in bacterial communities, and the concept of exploitation range and the associated analysis tools to be generally applicable.