C172 flight instructor reported a student pilot turned in conflict resulted in taking evasive action and a NMAC.

Narrative

I along with another certificated pilot were practicing touch and goes at ZZZ in a Cessna 172. We were following a Citabria in the pattern and a second flight Solo Student was following our plane in a Cessna 172. We had just turned from crosswind to downwind following the Citabria; when the pilot flying with me noticed on his ADS-B that the Student following us was turning crosswind right into our plane. I was looking for the student and when I saw that the student did not see us I did an evasive maneuver to avoid being hit by the student pilot. I turn away from the student and descended. As I was doing this I called the tower to report a near hit and to let then tower know what I was doing.Once the tower controller saw what was happening; the controller asked the student if they saw us to which the answer was no. Then the controller had use turn a very wide downwind to follow the Student.Had we not been on our toes and noticed what had happened we could have hit.My take away from all of this is the tower's main focus is on the approach end of the runway and not the departure end. As well 14CFR 91.3 states that the PIC is responsible for the safety of the flight; not the controller. I did what I needed to do to keep myself and the other pilot safe. Even in a controlled environment we still have to look out for other not doing the correct thing.