I think the OP has a valid point. When you consider the price of upgrading markets in your cities what is the pay off? What opportunity cost are you loosing by not spending on troops?

Merchants are very hit-and-miss for me. No matter how long they have been standing on a resource, no matter how far they go and no matter how much profit they are making they seem to be very easy prey to other merchants. Again, I am not convinced they are worth it either given their price. I know about taking other merchants and you can't stand 2 merchants on the same resource, you have to have 2 similar resources in the same province. But even then the return is relatively minimal.