you can already detect and merge duplicates:
http://www.zotero.org/support/duplicate_detection
note that collections aren't folders. The same, single item can be in multiple collections. There is no reason to have multiple copies of the same item in your library (so if you do, you should merge them).

I am not sure if this discussion is still relevant, but in the current version (2021) duplicated bibliography entries in collaborative documents in Word are most commonly caused by adding citations from different sources. For example, some might come from a users "My library" and some might come from one or more groups that a user is a member of. Even though these entries may have identical data, Zotero will treat them as different. Additionally, if you are working with a collaborator and the collaborator has added an entry that you do not have in "My Library" or in a group that you are a member of, that entry will persist in the word document in the zotero-inserted field codes for that reference. If you then later create a shared group for the project and add the same reference from the shared group, you need to delete and re-add the earlier reference. Otherwise, the bibliography will have separate entries for the same, identical reference. There are two ways to identify references that are persisting in the document without pointing to a shared group. One is to attempt to edit the citation; at the bottom of the edit window a button should appear that says "Open in ". Alternatively, if you set field codes to visible in Word, the field codes will have the word "user" (plus a numerical ID) as opposed to "group" (again with a numerical ID) as the source of the reference.