If the merchant has the hottest offer for their particular niche I'd say the merchant generally has the power. All applicable publishers will want to advertise the offer since it is what makes them the most money.
If the merchant does not have a hot offer then the publisher will obviously have the power because the merchant will have to convince (persuade) a publisher to run their offer.
I agree it always the merchants who will have the power. A merchant perceives the ROI for a customer and gives a bonus/reward structure based on it.
Ex: Look at the recent growth in the online poker industry. 4 yrs back hardly anyone knew about it, today everyone is becoming an affiliate for them due to high returns they offer to affs and also value for money for the players.
the merchant will always have the power as he drives the industry and affiliates are like distributors or networking channel.
If you are a big affiliate you become an important part of the merchant's business, and other merchants will compete for you to be their affiliate. In that case, the affiliate has quite a bit of power.
If you are a smaller affiliate you have no power whatsoever, you have to be very careful.