Here's more from my study of power through the framework of Symbolic Interactionism. This section may need some more editing because it is still fairly wordy, basically the whole point is that power is negotiated through interaction. The one theory that I present focuses on the power one has in assigning labels to another while the second theory focuses on the power that one has in choosing who can assign labels to them. If you're not interested in this stuff, then don't read it :]
The main difference between Identity Theory and Labeling Theory can be seen in the focus of the individual who is the subject. In Symbolic Interactionism an individual's role in the situation is seen as being based on the reflected appraisals they receive from those around them. According to Identity Theory, however, the individual doesn't passively accept these assigned roles but rather actively seeks those who will positively regard their identity, hence giving them positive reflected appraisals. Thus identity theory focuses on the individual as an active creator of their identity who seeks out those who will affirm their self-perceived identity. (Jackson et al.) Labeling theory, on the other hand, simply focuses on how the individual responds to labels attached to them. In labeling theory, then, the individual is not as active in choosing their identity, rather, they conceptualize themselves as a significant other by looking at themselves through the labels others have attributed to them. (Adams et al 2003; Matsueda 1992) In summary, identity theory looks at the process by which individuals seek out those who will give positive reflected appraisals of their identity while labeling theory looks at the process by which one can influence others' identity through the use of labels. This relates to power because identity theory gives insight into the power that an individual has in creating their own identity by selecting the contexts in which they interact and how they interact in hostile contexts. Labeling theory, on the other hand, gives insight into the power that people have over others' identities, especially in the formative stages of those identities, through their interactions with them. Either theory by itself gives an incomplete view of the picture, because both of them paint one person as passive and the other as active, but when taken together these two theories portray two actors on a stage, both actively negotiating the definitions of situations and roles to which the other must respond.