Studies of competition intensity over natural (i.e. topographic) gradients often contradict the results from studies where artificial (i.e. fertilizer) gradients have been used. Why should the type of gradient matter? To explore the possibilities, we performed experiments to measure competition intensity experienced by tree seedlings from grass competitors across a natural resource gradient, and simultaneously across artificial soil nutrient (fertiliser) gradients. We measured various functional traits (i.e. specific leaf area, leaf area, leaf nitrogen content, delta(15)N, delta(13)C, RGR) to gain mechanistic insight into the nature of competition across these gradients. Competition intensity increased with increasing resource availability, unequivocally at the local scale (i.e. with fertilizer application) but not at the regional scale (i.e. across the natural productivity gradient). Our measurements of plant traits were generally consistent with measurements of competition intensity, and demonstrate that competition occurs even when resource levels are low. Competition mainly acted to reduce the growth of Eucalyptus seedlings. Functional (physiological) traits in the Eucalyptus seedlings were not strongly affected by competitors, with the possible exception of delta(15)N, which may effectively integrate information on soil nutrient, moisture and leaf processes.