Electron-electron interactions in general lead to both ground state and excited state confinement. We show, however, that in phenyl-substituted polyacetylenes electron-electron interactions cause enhanced delocalization of quasiparticles in the optically excited state from the backbone polyene chain into the phenyl groups, which in turn leads to enhanced confinement in the chain direction. This co-operative delocalization--confinement lowers the energy of the one-photon state and raises the relative energy of the lowest two-photon state. The two-photon state is slightly below the optical state in mono-phenyl substituted polyacetylenes, but above the optical state in di-phenyl substituted polyacetylenes, thereby explaining the strong photoluminescence of the latter class of materials. We present a detailed mechanism of the crossover in the energies of the one- and two-photon states in these systems. In addition, we calculate the optical absorption spectra over a wide wavelength region, and make specific predictions for the polarizations of low and high energy transitions that can be tested on oriented samples. Within existing theories of light emission from $pi$-conjugated polymers, strong photoluminescence should be restricted to materials whose optical gaps are larger than that of trans-polyacetylene. The present work show that conceptually at least, it is possible to have light emission from systems with smaller optical gaps.
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