Involves buying in one market and selling at a higher price in another. It prevents prices from diverging in different markets by more than the transaction costs .
For example, for many years dealers bought antiques in the UK and shipped them to the Netherlands, where prices were higher. Similarly, when a currency is losing value in one country as the exchange rate falls, dealers will buy it and sell it again in a country where the exchange rate is higher. This tends to even out exchange rates so that they are normally very similar in different countries.