Mercedes boss Toto Wolff says three car teams remain an option for Formula One if Red Bull follows through on its threat to quit the sport.

Red Bull is currently trying to negotiate an engine deal for 2016 after deciding to split with current supplier Renault at the end of the year. Originally it approached Mercedes but the German brand does not want to supply one of its biggest rivals with its most prized asset.

Negotiations with Ferrari are ongoing, but Red Bull has made clear it will quit the sport if it cannot secure engine parity with the cars of the works team. Losing Red Bull would see two teams disappear from the grid as Toro Rosso would also be affected by the decision.

Wolff said he would rather see Red Bull's team remain in the sport, but made clear that three car teams are a viable fall-back option.

"Yes, if a team would leave -- and we had this discussion about Lotus a while ago -- third cars are a solution to fill up the grid," he said. "For me personally it is a pretty exciting idea.

"I'd rather have Red Bull in the sport than third cars and a grid of 27 or 28 cars. But this is definitely one of the fall-back solutions."

But Wolff said there are no plans for Mercedes to backtrack on its decision not to supply Red Bull.

"You can't close your eyes to the fact that this [F1] is a platform and it needs players and it needs a competitive environment and it needs competitive teams. That was part of our consideration. Red Bull is a hip brand and it's good for Formula One that Red Bull is in here, but it is also an environment where you need to look at yourselves and the team's performance with the priority.

"When it comes up to the decision, would you rather go with the platform and the good sport or would you rather go with the team's perspective. It's clear from our point of view that you need to prioritise your own competitiveness.

"We have waited so long to have success with our own works team ever since Mercedes decided to go into Formula One and not continue only as an engine supplier. Obviously this had a rationale and that rationale is still valid today and this is why we took the decision some weeks ago not to continue [negotiations with Red Bull] and then Ferrari picked that ball up."