Depending upon the hour, season and distance, hard bargaining is acceptable in this situation, as the taxi wants the fare and might not get another passenger. Whatever you agree to will be more than a Mexican would pay. The local rate implies the right to carry other passengers, who will be charged individually at the same rate. Even though this is not legal, it has been ratified by long usage. Don't complain, as it makes transportation easier for everyone.
Most taxi drivers rent their cars by the day and have to pay for their own gas.
It's not an easy way to make a living. The local rate also usually requires exact change, although some drivers, usually owners, just charge the local rate and will even give you change if you give them too much. This causes cardiac arrest and general consumer mortification among tourists who have innocently paid higher fares and feel that life has no meaning unless they always get the lowest price in any transaction, no matter how small. If you don't want to hassle, the best thing is to ask the rate before you get in. It's different for those of us who live here and count taxi fares as a household budget item.