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This paper develops a distributed algorithm for rate allocation in wireless networks that achieves the same throughput region as optimal centralized algorithms. This cross-layer algorithm jointly performs medium access control and physical-layer rate adaptation. The paper establishes that this algorithm is throughput-optimal for general rate regions. In contrast to on-off scheduling, rate allocation enables optimal utilization of physical-layer schemes by scheduling multiple rate levels. The algorithm is based on local queue-length information, and thus the algorithm is of significant practical value. An important application of this algorithm is in multiple-band multiple-radio throughput-optimal distributed scheduling for white-space networks. The algorithm requires that each link can determine the global feasibility of increasing its current data-rate. In many classes of networks, any one link's data-rate primarily impacts its neighbors and this impact decays with distance. Hence, local exchanges can provide the information needed to determine feasibility. Along these lines, the paper discusses the potential use of existing physical-layer control messages to determine feasibility. This can be considered as a technique analogous to carrier sensing in carrier sense multiple access (CSMA) networks.