[Sniffnoy]

Well, you're assuming that passing is an option. One possibility would be that if you're bidding first, since there's no prior bid to pass to, you must bid; you can bid 0, but you can't pass. The rules just say it's an auction; they don't even say that you take turns making bids (or that this occurs in the usual turn order, or who starts), rather than it being more of a free-for-all! Like I said, it's all kind of undefined.

EDIT: Actually, a better answer for how to interpret it -- all players passing is impossible, because if all but the last player passes, then the last player has won the auction (for $0) by virtue of everyone else having passed; they don't get to a chance to pass, because they win the auction before it'd ever be their turn to pass! This is actually a pretty natural intepretation and I think how some of the video game adaptations handle it.

[SamBam]

The rules specifically say "Any player, including the one who declined the option to buy it at the printed price, may bid."

May bid. No player is required to bid.

Assuming that, while the rules don't say so explicitly, what they really mean is that the last player in the circle is forced to take the property is unreasonable. That's a fairly complicated rules. If that's what they meant, they'd have said it, not left it up to the players to work out.

Sine they didn't say it, it's much more reasonable to think that they just assumed everyone knows how an auction works in real life. No one is forced to bid on a Picasso when it goes on the block. It doesn't get foisted on the last person on the bidding bench who makes no bid.