Competition is now widely used as the means of choosing the providers of essential public services in the USA and the UK. Many different approaches are found in the USA and there are useful lessons for the UK. With particular reference to mental health and substance abuse services, describes the effects of using competitive tendering on users, providers, purchasers and citizens and examines the problems of specification, transaction costs, the use of consultants, supply, the level playing field, trust, innovation, local accessibility and accountability. Ends with discussion of co-operation and collaboration and the emergence of monopolies and integrated delivery systems in the USA and concludes by finding politics and political decision making of overriding importance.