The Mercure was larger than the 737-200 and carried more payload, therefore shorter range - the fuel tanks were simply much smaller. It was optimised for short routes, for instance Air Inter's domestic routes in France.
But with such a short rance it wasn't frexible in an airline fleet, that killed it. Of course it might have been developed into a more flexible plane, but the competition was tough against DC-9, B737, B727, BAC 1-11, Trident etc.
In the end I think that it was in fact developed into a great plane. Some ten years back I saw a Mercure and an A320 parked side by side in Paris CDG and I remember thinking that it was strange engines one of those A320's. Maybe we should rename the A320 into Mercure Mk.2 ? The similarities are really striking.
Does anybody know if there really is a connection?
As far as I know the Mercure did very good service for Air Inter for almost twenty years with a perfect safety record. That's not a bad reputation for an old plane.
Always keep your number of landings equal to your number of take-offs