This paper is initiated to answer the above questions. The study intentionally focuses on the
service market, where maintaining a certain level of consumer satisfaction is a necessity rather
than a competitive advantage. As a result, there is a high price elasticity of demand and firms
with high consumer satisfaction scores may not necessarily possess any price premiums. In
the paper, we first introduce two different types of price tolerance, i.e. price increase tolerance
and price decrease tolerance, and the associations between satisfaction and price increase/
decrease tolerance are then investigated. We proceed to test whether the popular notion –
satisfied consumers will accept a price premium even though they know the firm is charging
more than its competitors – still holds true in the context of competitive service markets. To
this end, we develop a mediation model in which the two price tolerance variables are hypothesised
to mediate the relationship between consumer satisfaction and repurchase intention