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In this paper, we present a cross-layer approach for video transmission in wireless LANs that employs joint source and application-layer channel coding, together with rate adaptation at the wireless physical layer (PHY). While the purpose of adopting PHY rate adaptation in modern wireless LANs like the IEEE 802.11a/b is to maximize the throughput, in this paper we exploit this feature to increase the robustness of wireless video. More specifically, we investigate the impact of adapting the PHY transmission rate, thus changing the throughput and packet loss channel characteristics, on the rate-distortion performance of a transmitted video sequence. To evaluate the video quality at the decoder, we develop a cross-layer modeling framework that considers jointly the effect of application-layer joint source-channel coding (JSCC), error concealment, and the PHY transmission rate. The resulting models are used by an optimization algorithm that calculates the optimal JSCC allocation for each video frame, and PHY transmission rate for each outgoing transport packet. The comprehensive simulation results obtained with the H.264/AVC codec demonstrate considerable increase in the PSNR of the decoded video when compared with a system that employs separately JSCC and PHY rate adaptation. Furthermore, our performance analysis indicates that the optimal PHY transmission rate calculated by the proposed algorithm, can be significantly different when compared with rate adaptation algorithms that target throughput improvement.