Abstract
Color-octet contributions to quarkonia production at LEP are studied herein. The short distance formation of heavy quark-antiquark pairs in color-octet configurations via gluon fragmentation processes is significantly enhanced relative to the creation of color-singlet pairs via heavy quark fragmentation. But the subsequent long distance hadronization of these colored pairs into physical quarkonium bound states is suppressed compared to the nonperturbative evolution of their colorless counterparts. We find that the overall LEP rates for gluon fragmentation into prompt Upsilon and Psi vector bosons exceed those from heavy quark fragmentation. Inclusion of the dominant color-octet quarkonium production channel eliminates sizable discrepancies between previous predictions and recent measurements of prompt $Z \to \Jpsi+X$, $Z \to \psi'+X$ and $Z \to \Upsilon+X$ branching fractions.

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