SQL Server 2008 :: Merge Statement Takes Several Times Longer To Execute Than Equivalent Update

Problem Summary: Merge Statement takes several times longer to execute than equivalent Update, Insert and Delete as separate statements. Why?

I have a relatively large table (about 35,000,000 records, approximately 13 GB uncompressed and 4 GB with page compression - including indexes). A MERGE statement pretty consistently takes two or three minutes to perform an update, insert and delete. At one extreme, updating 82 (yes 82) records took 1 minute, 45 seconds. At the other extreme, updating 100,000 records took about five minutes.When I changed the MERGE to the equivalent separate UPDATE, INSERT & DELETE statements (embedded in an explicit transaction) the entire update took only 17 seconds. The query plans for the separate UPDATE, INSERT & DELETE statements look very similar to the query plan for the combined MERGE. However, all the row count estimates for the MERGE statement are way off.

Obviously, I am going to use the separate UPDATE, INSERT & DELETE statements. The actual query plans for the four statements ( combined MERGE and the separate UPDATE, INSERT & DELETE ) are attached. SQL Code to create the source and target tables and the actual queries themselves are below. I've also included the statistics created by my test run. Nothing else was running on the server when I ran the test.

Server Configuration:

SQL Server 2008 R2 SP1, Enterprise Edition
3 x Quad-Core Xeon Processor
Max Degree of Parallelism = 8
148 GB RAM

SQL Code:

Target Table:
USE TPS;
IF OBJECT_ID('dbo.ParticipantResponse') IS NOT NULL
DROP TABLE dbo.ParticipantResponse;

[code]....