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The majority of the European countries have experienced a turn towards activation policies during the last two decades ( Serrano Pascual and Magnusson 2007; van Berkel and Borghi 2008; Bonoli 2010; Aurich 2011; Graziano 2009 and 2012). The interlinked aim to increase employment rates by integrating formerly excluded groups into the labour market requires new forms of governance and new structures of policy implementation. One of these policy changes concerns the marketization of employment and social services ( Considine 2001; Newman 2001), an important part of policy delivery in most welfare states although in very different forms and extents. Since the local level plays a crucial role in delivering policies ( Künzel 2012; Green and Orton 2012), an important element, and the main focus of the article, is the level of discretion of local actors and their relation to activation interventions. This article draws on the findings of three qualitative case studies on the organization of activation policies in three most different countries regarding worlds of welfare: Germany, Italy and the UK. It develops a theoretical framework of regulating marketization in regard to activation, and analyses the three empirical cases according to it. The findings show a link between the regulation of market-based interventions (i.e. type of marketization, outsourcing decisions and purchaser-provider split) and the level of discretion for local actors with regard to these measures. Local contexts of policy-making and their suitability and willingness to become marketized will affect the usage of local discretion. [ABSTRACT FROM AUTHOR]