—This paper addresses the problem of optimal rate allocation for video streaming in a multi-path peer-to-peer mesh network. We present a distributed rate allocation algorithm that minimizes the total rate distortion among receiving peers. The scheme assumes that video streams can be transcoded/requantized at intermediate peers. We deploy a double pricing solution that simultaneously incorporates both the network and the relay constraints. We compare it with a single pricing solution where the relay constraint is applied only after all the communicating peers have converged. Our simulation shows that the double pricing solution consistently achieves a smaller aggregate distortion for all peers in comparison to the single pricing solution and thus achieves higher video quality.