In bilateral holdup and moral hazard in teams models, introducing
a third party allows implementation of the first best, even if renegotiation
is possible. Fines paid to the third party provide incentives
for truth-telling and investment. This result holds even if the third
party is corruptible, as long as the grand coalition has access to
the same contracting technology as any colluding subcoalition. (JEL
Baliga, Sandeep, and Tomas Sjöström.
"Contracting with Third Parties."
American Economic Journal: Microeconomics,
Asymmetric and Private Information
Economics of Contract: Theory