Abstract: In order to understand the nature of firm market power in intermediate input and labor markets, we study the determinants of the prices that firms pay for their inputs. Traditional studies on monopsony power rely on demand-shift instruments to identify supply elasticities, and infer monopsony power from estimating an upward-sloping supply curve. Our research departs from this approach, showing that when input prices and wages are influenced by bargaining processes, demand shocks may no longer be valid instruments. To address this problem, we leverage uniquely rich and highly disaggregated data from textile firms in the Brazilian state of S\~ao Paulo. This data includes transaction-specific prices for every purchase of intermediate inputs and detailed information on employment levels and wages by occupation-education categories. The fine granularity of the data enables us to implement novel identification strategies, and our results reveal that market power manifests in ways that differ significantly from those identified in previous research.