Collaborating on a document in shared folder not working

Hello, I am collaborating with a collague on several tasks in a shared dropbox folder. I set it up as I thought it was possible that way to work together on one document - if needed even simutaneously -  (in a similar way you can do it in a googledoc. However, whenever we do that, Dropbox creates a new 'conflicted copy' document and then I have to merge the two docs which is not what I wanted this to be. I would appreciate any help in this -  do I have to change the settings somewhere? Thank you a lot in advance!