Founded by Empress Catherine II (the Great), the Hermitage in St Petersburg, Russia, is one of the world's great art museums. General admission is free for all students and children, and Russian pensioners. The price is 350 roubles for Russian adults, and 400 roubles (equivalent to $6) for foreign adults. Through its website, the Hermitage encourages visitors to buy tickets through the Internet at a price of $17.95 and so "avoid a long line at the ticketing office." The Hermitage also offers free admission to all visitors on the first Thursday of each month.

(a)

Explain how the Hermitage uses direct segment discrimination. Discuss whether Hermitage pricing meets the conditions for such discrimination.

(b)

Explain how the Hermitage uses indirect segment discrimination. Discuss whether Hermitage pricing meets the conditions for such discrimination.

(c)

Comment on the free admission on the first Thursday of each month with regard to: (i) maximizing the number of visitors served for a given budget; and (ii) cannibalization.