In each of the following sentences, the second highlighted element forms a cohesive tie with the first. A pro-form is used to to replace a word, phrase or clause used earlier in the text, thus avoiding repetition.
- Anne walked in and sat down. She picked up a newspaper.
- John sipped his coffee.
- John suggested a publicity campaign. The idea obviously had advantages but....
- I don't want those potatoes. Give me 2lbs of the others, over there.
- John sipped his coffee. I did so too.
However, there is a difference between them. Those in Group A are reference items : the referring word/phrase is identical to the one it replaces. In these contexts She is Anne, the publicity campaign is the idea - and so on. The reference item could be taken out and replaced with the original : John sipped John's coffee
Those in Group B, on the other hand, are substitution devices. The substituting item replaces not the the exact item used elsewhere but indicates an object, action, concept etc that is similar in concept. Eg : John sipped his coffee. I did so too. This would normally not be taken to mean that I sipped John’s coffee, but that I sipped my own.
Substitution also differs grammatically from reference in that substitution items can be modified by determiners, adjective or adverbs – eg that red one, I really do whereas referring expressions cannot *that red it.
For a fuller account of different types of reference, see Reference