Can google (ad words) and yahoo pay per click work for regional as well e.g : Canada > Quebec > Montreal ? Thanks

Yes, but you will have to work on the PPC terms to be more specific as to your target market.

Thanks ClickIt. Can you give me an example , please?
I want to target by city only if possible..

Google offers regional options at the Campaign level. The original Yahoo! Search Marketing does not as they have a separate offering called Yahoo! Local Match. That is changing this quarter though to a system more similar to Google's.

I believe ClickIt is suggesting you use locations in your keyword phrases while you are asking more about automatic geo-targeting done by the PPC engines. You can do both.